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There wasn’t much in the docket for the session. Even so, there was price action aplenty. And noteworthy among these was the Greenback since it was broadly in demand. The Swissy is noteworthy as well since it suffered a lot as risk-taking persisted.

  • Euro Zone industrial production m/m: -0.6% vs. -0.5% expected, 1.2% previous
  • Euro Zone industrial production y/y: 2.6% vs. 2.8% expected, 3.9% previous

Major Events/Reports

Commodities routed

Commodities are starting the new trading week by retreating across the board. And according to market analysts, the broad-based commodities rout was due to the stronger U.S. dollar and/or China’s disappointing industrial production report from earlier.

And for reference, the U.S. dollar index was up by 0.27% to 93.24 for the day by the time the session came to a close.

Precious metals felt the pain.

  • Gold was down by 0.55% to $1,286.90 per troy ounce
  • Silver was down by 0.35% to $17.011 per troy ounce

Base metals were more mixed but most were bleeding out.

  • Copper was down by 0.76% to $2.890 per pound
  • Nickel was down by 0.56% to $10,577.50 per dry metric ton

Oil benchmarks took hits.

  • U.S. WTI crude oil was down by 0.70% to $48.48 per barrel
  • Brent crude oil was down by 0.83% to $51.67 per barrel

Optimistic start in Europe

After being plagued by intense feelings of gloom and (literal) doom last, the major European equity indices are starting the new trading week on a rather upbeat note by printing strong gains across the board.

Like in the Asian session, market analysts are still saying that the general risk-on vibes were due to fading worries over last week’s mass hysteria over North Korea.

However, some market analysts who were more focused on European markets said that the risk-on mood was also due to the recovery in European banking shares, as well as strong earnings results for European energy and mining companies, which allowed these commodity-dependent companies to just shrug off the commodities rout during the session.

  • The pan-European FTSEurofirst 300 was up by 0.85% to 1,474.73
  • Germany’s DAX was up by 1.08% to 12,143.50
  • The blue-chip Euro Stoxx 50 was up by 1.13% to 3,441.00

U.S. equity futures were also in positive territory, so the risk-on vibes may carry over into the upcoming U.S. session.

  • S&P 500 futures were up by 0.56% to 2,453.62
  • Nasdaq futures were up by 0.53% to 5,869.12

Major Market Mover(s):

USD

The Greenback was in rally mode during the session. In fact, the Greenback also happens to be the best-performing currency of the day (so far).

There’s no clear reason for the Greenback’s strength at this point and market analysts are only acknowledging the Greenback’s strength without really bothering to explain the reason for the strength.

A clue to the Greenback’s recovery is the recovery in rate hike expectations. As you can see below, odds for a December rate hike stood at 42%. And if you were able to read up on last week’s weekly recap, then you know that odds for a December rate hike dropped from 43.7% to 35.9% on Friday due to the disappointing CPI report, which dragged the Greenback lower.

That’s great and all, but what caused rate hike expectations to recover? Well, that’s not very clear. However, I did point out in my weekly recap that the disappointing CPI report had a silver lining.

To be more specific, the headline reading printed a 1.7% increase, which is a tick faster than the previous reading and breaks four consecutive months of ever weaker annual readings. Also, the annual core reading maintained the 1.7% pace as expected.

Anyhow, whatever caused the Greenback to recover after getting whacked lower in the wake of last week’s CPI report, the fact remains that the Greenback had a good run during the session and is currently on course to finishing as the best-performing currency of the day.

EUR/USD was down by 37 pips (-0.31%) to 1.1792, GBP/USD was down by 40 pips (-0.31%) to 1.2968, AUD/USD was down by 20 pips (-0.26%) to 0.7871

CHF

The safe-haven Swissy got a good beating during the session, thanks to the risk-on vibes. Although SNB meddling is always a possibility, especially after last week’s broad-based Swissy rally.

USD/CHF was up by 40 pips (+0.42%) to 0.9683, NZD/CHF was up by 11 pips (+0.15%) to 0.7062, EUR/CHF was up by 14 pips (+0.12%) to 1.1420

Watch Out For:

  • No economic reports on the docket