Demand for the comdolls (AUD, NZD, CAD) was sustained during the morning London session, thanks to the steady and broad-based rise in commodity prices.
Greenback weakness may have also helped since the Greenback was one of the major losers of the session.
The Greenback wasn’t the biggest loser of the session, though, since that dishonor goes to the yen.
- Euro Zone current account: €23.9B vs. €21.4B expected, €19.5B previous
- U.K. public sector net borrowing: £3.3B vs. £4.6B expected, £4.8B previous
- Canada’s CPI and retail sales reports coming up
Commodities broadly higher
Most commodities caught a bid during the earlier session and buyers continued to push commodity prices higher during the morning London session.
We can probably thank the Greenback’s overall weakness for that since a weaker U.S. dollar means that globally-traded commodities (priced in USD) become relatively cheaper, especially for market players who hold non-USD currencies.
And for reference, the U.S. dollar index was down by 0.10% to 95.62 for the day by the end of the session.
However, it’s also probable that trade-related fears may be easing since commodities (and the comdolls) began trending higher after China officially announced that it will ask the WTO to form a dispute resolution panel to address the U.S. tariffs on steel and aluminum.
Other than those, market analysts also say that oil prices were on the rise because of signs that Chinese demand may be picking up, as well as bargain buying after oil slumped hard last week and this week.
Base metals were still in demand.
- Copper was up by 0.75% to $2.767 per pound
- Nickel was up by 2.38% to $12,592.50 per dry metric ton
Precious metals didn’t do as well, but were still in the green.
- Gold was up by 0.10% to $1,231.20 per troy ounce
- Silver was up by 0.45% to $14.670 per troy ounce
Oil benchmarks were also well in the green.
- U.S. WTI crude oil is up by 0.82% to $69.21
- Brent crude oil is up by 1.11% to $80.17
Fading risk-off vibes in Europe
Europe is closing out the week on a downbeat note since the major European equity indices were broadly in the red during the session.
And according to market analysts, the risk-off vibes in Europe were due to disappointing earnings results, as well as concerns surrounding Italy’s budget after the E.U. sent a letter to Rome yesterday since the letter warned that Italy’s budget point to a “particularly serious non-compliance with the budgetary policy obligations laid down in the Stability and Growth Pact.”
Risk aversion appears to be fading, though, since the major European equity indices began turning higher near the end of the session.
The reason for the fading risk-off vibes is not yet very clear. However, energy shares were already in the green and mining shares pared a large chunk of their losses, so it’s likely that the rise in commodity prices may be the reason.
- The pan-European FTSEurofirst 300 was down by 0.13% to 1,418.13 but off the day’s low at 1,411.78
- Germany’s DAX was down by 0.25% to 11,559.83 but off the day’s low at 11,499.07
- The blue-chip Euro Stoxx 50 was down by 0.31% to but off the day’s low at 3,203.65 3,185.65
U.S. equity futures were already well in the green, so risk-taking may return during the U.S. session.
- S&P 500 futures were up by 0.32% to 2,781.25
- Nasdaq futures were up by 0.58% to 7,179.25
Major Market Mover(s):
The Aussie and the Kiwi battled for supremacy during the morning London session, with the Kiwi ultimately coming out on top.
The Loonie was also bid higher, but couldn’t mount an effective challenge against the Aussie and Kiwi, probably because traders are wary of loading up on the Loonie ahead of Canada’s CPI and retail sales report.
However, it’s also possible that the Aussie and Kiwi were getting an extra boost from the Greenback’s weakness.
NZD/USD was up by 24 pips (+0.37%) to 0.6593, NZD/CHF was up by 23 pips (+0.36%) to 0.6565, NZD/CAD was up by 20 pips (+0.23%) to 0.8594
AUD/USD was up by 19 pips (+0.26%) to 0.7136, AUD/CHF was up by 18 pips (+0.26%) to 0.7107, AUD/CAD was up by 12 pips (+0.13%) to 0.9303
USD/CAD was down by 16 pips (-0.13%) to 1.3037, EUR/CAD was down by 11 pips (-0.07%) to 1.4948, GBP/CAD was down by 33 pips (-0.20%) to 1.6982
USD & JPY
U.S. bond yields were drifting lower for most of the session. And the Greenback was apparently taking directional cues from U.S. bond yields and was lagging behind its peers.
However, U.S. bond yields turned higher late into the session. And that allowed the Greenback to score a win against the yen, so the Greenback only closed out the session in second-to-last place.
NZD/JPY was up by 30 pips (+0.41%) to 74.15, AUD/JPY was up by 25 pips (+0.31%) to 80.26, CAD/JPY was up by 16 pips (+0.18%) to 86.27
EUR/USD was up by 7 pips (+0.06%) to 1.1466, USD/CHF was down by 4 pips (-0.04%) to 0.9959, USD/JPY was up by 6 pips (+0.05%) to 112.48
Watch Out For:
- 12:30 pm GMT: Headline (0.3% expected, same as previous) and core (0.1% expected vs. 0.9% previous) readings for Canadian retail sales
- 12:30 pm GMT: Canada’s CPI (0.0% expected vs. -0.1% previous); read Forex Gump’s Event Preview
- 2:00 pm GMT: U.S. existing home sales (5.29M expected vs. 5.34M previous)
- 4:00 pm GMT: Atlanta Fed President Raphael Bostic will give a speech
- 4:10 pm GMT: BOE Guv’nah Mark Carney is scheduled to deliver a speech