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Price action during today’s morning London session was rather choppy, but the higher-yielding Aussie and Kiwi were clearly in high demand despite the risk-off vibes during the morning London session, very likely because commodities were in rally mode.

Oil was raking in gains as well, but the Loonie was steady for the most part, probably because traders are waiting for Canada’s CPI report to be released.

  • German PPI m/m: 0.2% vs. 0.1% expected, 0.0% previous
  • German PPI y/y: 2.3% vs. 2.2% expected, 2.4% previous
  • Euro Zone current account: €21.2B vs. €27.3B expected, €30.5B previous
  • Canada’s CPI report coming up

Major Events/Reports

Commodities bounce broadly higher

After dipping yesterday, commodities had a broad-based bounced during today’s morning London session.

The likely reason for the broad-based in commodity prices is the Greenback’s recent weakness, which makes globally-traded commodities relatively cheaper and more attractive to buy.

And for reference the U.S. dollar index was down by 0.34% to 93.32 for the day when the session came to an end.

Aside from that, market analysts also pointed to expectations that Chinese demand will strengthen as the reason for the decent performance of base metals. After all, China is the top consumer of industrial metals.

Meanwhile, other market analysts say the rise in oil prices was due to signs of signs that the oil market is rebalancing because of tighter supplies.

Base metals were broadly in the green.

  • Copper was up by 0.24% to $2.945 per pound
  • Nickel was up by 1.40% to $10,827.50 per dry metric ton

Oil benchmarks were well supported..

  • U.S. WTI crude oil was up by 0.45% to $47.30 per barrel
  • Brent crude oil was up by 0.33% to $51.20 per barrel

Precious metals had another good run.

  • Gold was up by 0.63% to $1,300.50 per troy ounce
  • Silver was up by 0.28% to $17.101 per troy ounce

Risk aversion persists

The risk-off vibes refused to go away, so the major European equity indices were leaking red again today.

And according to market analysts, today’s bout of risk aversion was still due to jitters over yesterday’s terror attack in Barcelona, which weighed heavily on airlines and travel companies, souring overall risk sentiment in the process.

  • The pan-European FTSEurofirst 300 was down by 0.94% to 1,466.20
  • Germany’s DAX was down by 0.89% to 12,095.00
  • The blue-chip Euro Stoxx 50 was down by 1.12% to 3,425.50

It also looks like the gloomy mood may carry over into the U.S. session since U.S. equity futures were in the red.

  • S&P 500 futures were down by 0.16% to 2,425.62
  • Nasdaq futures were down by 0.12% to 5,793.38

Major Market Mover(s):

AUD & NZD

The prevalence of risk aversion during today’s morning London session was not enough to dampen demand for the higher-yielding Kiwi and Aussie, very likely because forex traders were more focused on the commodities rally.

NZD/USD was up by 25 pips (+0.35%) to 0.7321, NZD/JPY was up by 23 pips (+0.29%) to 79.87, NZD/CHF was up by 19 pips (+0.27%) to 0.7040

AUD/USD was up by 21 pips (+0.27%) to 0.7915, AUD/JPY was up by 17 pips (+0.20%) to 86.34, AUD/CHF was up by 14 pips (+0.19%) to 0.7611

GBP

Price action on the pound was actually kinda choppy. Nonetheless, the pound is worth mentioning since it was the worst-performing currency of the session.

There were no direct catalysts for the pound’s weakness. However, market analysts are still blaming the net negative U.K. economic reports this week for the pound’s overall weakness, since those reports apparently weakened expectations that the BOE will be hiking soon.

GBP/USD was down by 12 pips (-0.10%) to 1.2876, GBP/AUD was down by 57 pips (-0.35%) to 1.6267, GBP/NZD was down by 80 pips (-0.45%) to 1.7584

Watch Out For:

  • 12:30 pm GMT: Canada’s CPI report will be released (flat month-on-month expected, -0.1% previous); read Forex Gump’s Event Preview here
  • 2:00 pm GMT: University of Michigan’s preliminary consumer sentiment index (94.0 expected, 93.4 previous)
  • 2:15 pm GMT: Dallas Fed President Robert Kaplan will speak