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Battle lines were drawn between the higher-yielding Aussie and Kiwi and the safe-havens yen and Swissy.

And since risk-taking prevailed (and commodities recovered), the yen and the Swissy got whupped pretty bad and were forced to submit to the Aussie and Kiwi.

In other news, the ECB announced no changes to its monetary policy, so the event was essentially a dud and the euro had a mixed performance during the session.

The ECB presser is coming up, though, and that could potentially be a catalyst for the euro, depending on what ECB Overlord Draghi has to say.

  • Spanish jobless rate: 14.6% vs. 14.9% expected, 15.3% previous
  • German IFO business climate: 102.8 vs. 103.1 expected, 103.7 previous
  • ECB announced no changes to current monetary policy
  • ECB maintained refinancing rate at 0.00%
  • Marginal lending rate steady at at 0.25%
  • Deposit rate unchanged at -0.40%
  • QE at €15B per month will continue until December 2018
  • Forward guidance that QE program will end after December also reaffirmed
  • ECB repeated forward guidance that rates won’t budge “through the summer of 2019
  • ECB presser coming up; watch it live here

Major Events/Reports:

ECB’s monetary policy decision

As widely expected (and usual), the ECB stated in its official press statement that it was maintaining the current monetary policy.

The refinancing rate is is therefore steady at 0.00%, while the marginal lending rate is unchanged at 0.25%. As for the deposit rate, that’s still at -0.40%.

Also as usual, the ECB reaffirmed that its QE program will continue at a reduced monthly pace of €15 billion until the end of December of this year.

The ECB also repeated its forward guidance that “subject to incoming data confirming the medium-term inflation outlook, net purchases will then end” after December 2018.

As for future rate hikes, the ECB reiterated its hiking bias while also repeating its message that:

“The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019.”

Overall, nothing really new, so the event was essentially a dud. Market players are now sitting tight for what ECB Overlord Draghi has to say in the ECB presser.

And if you didn’t know, you can watch a live stream of the ECB presser by clicking here.

Commodities broadly higher

Most commodities slumped during the late Asian session and some of them even slipped into negative territory.

However, most commodities were able to stage a broad-based recovery during the session and are now mostly in positive territory for the day again.

It’s not really clear what caused commodities to recover, but the Greenback’s overall weakness is a probable reason since a weaker U.S. dollar would make globally-traded commodities relatively cheaper for investors who hold non USD currencies.

And for reference, the U.S. dollar index was down by 0.16% to 96.04 for the day by the time the session ended.

Oil benchmarks are in the green.

  • U.S. WTI crude oil is up by 0.36% to $67.06
  • Brent crude oil is up by 0.58% to $76.61

Base metals were mixed, but most were also in the green.

  • Copper was up by 0.49% to $2.760 per pound
  • Zinc was up by 0.07% to $19,327.50 per dry metric ton

Precious metals didn’t seem to mind the risk-friendly vibes too much and were also in the green.

  • Gold was up by 0.64% to $1,235.60 per troy ounce
  • Silver was up by 1.02% to $14.760 per troy ounce

Risk-on vibes in Europe

The major European equity indices had a wobbly start, but they quickly regained their footing and began marching broadly higher, so risk-taking was apparently the prevalent sentiment in Europe.

Market analysts couldn’t pinpoint a reason for the risk-friendly vibes in Europe, but some of them suggested that European equities may be perceived to be oversold, so we may be seeing some short-covering and/or bargain buying.

Energy shares outperformed, though, and mining shares weren’t far behind, so it’s also probably safe to assume that the risk-friendly vibes may have been due to the commodities rally.

  • The pan-European FTSEurofirst 300 was up by 0.33% to 1,394.67
  • Germany’s DAX was up by 0.44% to 11,240.91
  • The blue-chip Euro Stoxx 50 was up by 0.80% 3,155.65

Major Market Mover(s):

AUD & NZD

The Aussie and the Kiwi were both in demand during the session, thanks to the risk-friendly vibes and higher commodity prices.

AUD/USD was up by 23 pips (+0.33%) to 0.7090, AUD/CHF was up by 43 pips (+0.61%) to 0.7085, AUD/JPY was up by 42 pips (+0.53%) to 79.65

NZD/USD was up by 18 pips (+0.28%) to 0.6534, NZD/CHF was up by 36 pips (+0.56%) to 0.6529, NZD/JPY was up by 34 pips (+0.48%) to 73.40

CHF & JPY

The risk-friendly vibes may have been great for the Aussie and Kiwi, but they were apparently very toxic for the safe-havens yen and Swissy.

USD/JPY was up by 22 pips (+0.20%) to 112.33, EUR/JPY was up by 24 pips (+0.19%) to 128.13, GBP/JPY was up by 15 pips (+0.10%) to 144.86

USD/CHF was up by 28 pips (+0.28%) to 0.9992, EUR/CHF was up by 31 pips (+0.27%) to 1.1402, GBP/CHF was up by 22 pips (+0.17%) to 1.2885

Watch Out For:

  • 12:30 pm GMT: ECB presser; watch it live here
  • 12:30 pm GMT: Headline (-1.3% expected vs. 4.4% previous) and core (0.5% expected vs. 0.0% previous) readings for U.S. durable goods orders
  • 12:30 pm GMT: U.S. goods trade balance (-$74.9B expected vs. -$75.5B previous)
  • 12:30 pm GMT: U.S. preliminary wholesale inventories (0.5% expected vs. 1.0% previous)
  • 12:30 pm GMT: U.S. initial jobless claims (214K expected vs. 210K previous)
  • 1:00 pm GMT: CB’s Chinese leading index (0.7% previous)
  • 2:00 pm GMT: U.S. pending home sales (-0.1% expected vs. -1.8% previous)
  • 4:15 pm GMT: U.S. Fed Governor Richard Clarida will be speaking
  • 9:30 pm GMT: Cleveland Fed President Loretta Mester has a speech