The Greenback was swamped by sellers across the board right from the get-go and ended up as the worst-performing currency of the morning London session.
The Greenback’s pain is the euro’s gain, though, since the euro was able to claim the top spot, not just of the session, but of the day (so far) as well.
The Swissy, meanwhile, apparently got a free ride on the euro’s back since the Swissy just shrugged off Switzerland’s weaker-than-expected trade surplus, as well as the risk-friendly vibes in Europe.
- No economic reports were released during the European session
- Canada’s retail sales report coming up
- FOMC meeting minutes will be released later
U.S. political drama
Lanny Davis, Michael Cohen’s lawyer, was making the media rounds during the session.
And in an interview with MSNBC’s Morning Joe show, he had this to say:
— Morning Joe (@Morning_Joe) August 22, 2018
Davis was also interviewed by the TODAY Show on NBC and he repeated his message that
“The President of the United States directed him [Cohen] to commit a crime, meaning the President committed a crime and covered it up because he didn’t sign the cheque to keep quiet the affairs with the two women.”
And there’s more where that came from since Davis’ tour of the media circuit ain’t over yet…
"Would Michael Cohen seek a pardon from the President of the United States for any of this?" CNN's John Berman asks.
"The answer is definitively no," Lanny Davis says, claiming that Cohen has questioned Trump's suitability for the presidency and "loyalty to our country" pic.twitter.com/3aHDZ1x47O
— CNN Politics (@CNNPolitics) August 22, 2018
Commodities rise some more
Commodities were mixed during the earlier session but they were broadly in the green during the morning London session.
And we can probably thank another bout of weakness on the Greenback’s part for that. After all, a weaker U.S. dollar means that globally-traded commodities that are priced in U.S. dollars become relatively cheaper when the Greenback weakens.
In fact, market analysts were saying that industrial metals (except for copper) were well-supported because of the Greenback’s weakness.
And just for reference, the U.S. dollar index was down by 0.22% to 94.92 for the day by the end of the session.
Other than that, market analysts were also attributing the rise in oil prices to a report from the American Petroleum Institute (API), which revealed a draw in U.S. oil inventories and fueled speculation that official U.S. government data will also show a drop in U.S. crude oil inventories.
Base metals were in the green again, except for copper.
- Copper was down by 0.47% to $2.683 per pound
- Zinc was up by 0.75% to $2,446.00 per dry metric ton
- Nickel was up by 0.31% to $13,600.00 per dry metric ton
Precious metals were also able to add to their gains.
- Gold was up by 0.27% to $1,203.20 per troy ounce
- Silver was up by 0.09% to $14.780 per troy ounce
Oil benchmarks clearly outperformed.
- U.S. WTI crude oil was up by 1.38% to $66.75 per barrel
- Brent crude oil was up by 1.47% to $73.70 per barrel
More risk-taking in Europe
The major European equity indices had a wobbly start, but they eventually regained their footing and began to move higher as the session progressed. And that’s a sign that risk-taking is here to stay for another day.
Market analysts blamed the earlier wobble on Trump-related political drama and uncertainty surrounding the upcoming trade talks between the U.S. and China.
As to why risk-taking eventually won out, it’s not yet very clear. However, the most likely reason is that the major European equity indices were lifted by the rise in commodity prices since mining and energy shares were the biggest winners.
Something else might have been driving risk sentiment, though, since all sectors were actually in the green.
- The pan-European FTSEurofirst 300 was up by 0.20% to 1,505.32
- Germany’s DAX was up by 0.22% to 12,410.93
- The blue-chip Euro Stoxx 50 was up by 0.45% to 3,428.65
Major Market Mover(s):
The Greenback was the worst-performing currency of the morning London session, likely because of unwinding by USD bulls ahead of the FOMC minutes.
However, U.S. political drama may have also been weighing on the Greenback since the Greenback took noticeable hits when Davis began talking smack about U.S. President Trump and calling Trump a criminal.
USD/CHF was down by 32 pips (-0.33%) to 0.9815, USD/CAD was down by 11 pips (-0.09%) to 1.3022, USD/JPY was down by 16 pips (-0.15%) to 110.27
EUR & CHF
The euro was the biggest winner of the session, with the Swissy in second place. The euro, in particular, is noteworthy since the euro also happens to be the top-performing currency of the day (so far). Although the safe-haven Swissy did well as well, given the risk-friendly vibes in Europe.
There were no positive catalysts for the two, but it’s very likely that the euro was benefiting from the Greenback’s weakness and the Swissy, in turn, was moving in tandem with the euro (as it usually does).
Some market analysts also pointed to short-covering ahead of the FOMC minutes as a possible reason for the euro’s rise, which is pretty much the same since the Greenback’s pain is still the euro’s gain.
CAD/CHF was down by 19 pips (-0.25%) to 0.7537, GBP/CHF was down by 29 pips (-0.23%) to 1.2675, NZD/CHF was down by 10 pips (-0.15%) to 0.6583
EUR/USD was up by 45 pips (+0.39%) to 1.1610, EUR/CHF was up by 10 pips (+0.09%) to 1.1396, EUR/GBP was up by 26 pips (+0.30%) to 0.8991
Watch Out For:
- 12:30 pm GMT: Headline (-0.2% expected vs. 2.0% previous) and core (-0.1% expected vs. 1.4% previous) readings for Canadian retail sales; read Forex Gump’s Event Preview
- 2:00 pm GMT: U.S. existing home sales (5.40M expected vs. 5.38M previous)
- 2:30 pm GMT: U.S. crude oil inventories (-1.6M expected, 6.8M previous)
- 6:00 pm GMT: FOMC meeting minutes will be released