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The Greenback was the one currency to rule them all ahead of Fed Head Yellen’s speech later today and an expected unveiling of Trump’s tax plan tomorrow. The euro and the pound, meanwhile, got another good bashing and were the worst-performing currencies of the morning London session.

As for the other currencies, the commodities rout and returning risk-off vibes weighed down on the higher-yielding Kiwi and Aussie but gave the safe-havens yen and the Swissy a boost. The Loonie, meanwhile, was mixed.

  • German import prices m/m: 0.0% vs. 0.1% expected, -0.4% previous
  • German import prices y/y: 2.1% as expected vs. 1.9% previous
  • U.K. BBA mortgage approvals: 41.8K vs. 41.7K expected, 41.6K previous
  • Fed officials will be speaking later, including Fed Head Yellen herself
  • 4th round of Brexit negotiations underway today
  • French President Macron is expected to talk about his plans for the E.U.

Major Events/Reports

Commodities retreat

After a brief rally during the earlier Asian session, commodities turned tail and were broadly in retreat during today’s morning London session.

There were no clear catalyst for the broad-based commodities rout yet, but it’s highly likely that the commodities selloff was triggered by the Greenback rally during the morning London session.

After all, stronger U.S. dollar means that globally-traded commodities become relatively more expensive. And for reference, the U.S. dollar index was up by 0.26% to 92.68 for the day when the morning London session ended.

The returning risk-off vibes weren’t able to provide enough support to precious metals.

  • Gold was down by 0.27% to $1,307.92 per troy ounce
  • Silver was down by 0.11% to $17.128 per troy ounce

Oil benchmarks were in the red.

  • U.S. WTI crude oil was down by 0.57% to $51.92 per barrel
  • Brent crude oil was down by 0.84% to $57.94 per barrel

Base metals were mixed but most were also in the red.

  • Aluminum was down by 0.53% to $2,139.25 per dry metric ton
  • Nickel was down by 0.54% to $10,555.00 per dry metric ton

Upbeat start, but optimism fading (Part 2)

In what seems like a repeat of yesterday’s risk sentiment evolution, European equity indices started Tuesday’s morning London session on an upbeat note before showing signs of risk aversion later.

There was no clear reason for the early risk-on vibes. However, the aversion to risk during the later part of the morning London session was blamed by market analysts on renewed jitters related to North Korean, as well as continuing political uncertainty because of concerns with regards to Merkel’s ability to form a coalition government.

  • The pan-European FTSEurofirst 300 was still up by 0.01% to 1,509.25 but off today’s session high at 1,511.80
  • Germany’s DAX was up still up by 0.06% to 12,602.50 but off today’s session high at 12.630.50
  • The blue-chip Euro Stoxx 50 was already down by 0.03% to 3,537.50

Major Market Mover(s):

EUR

The euro got pummeled by a wave of sellers and was on the ropes again during today’s morning London session. There were no direct catalysts, but market analysts are still blaming the euro’s weakness on political uncertainty because German Chancellor Merkel has yet to form a coalition government.

Jitters ahead of French President Macron’s speech to rebuild the E.U. later today were also cited since the rise of the far-right AfD may force Merkel to ally with the FDP, a party which is not particularly fond of Macron’s ideas on deeper integration of the E.U. members.

EUR/USD was down by 57 pips (-0.48%) to 1.1788, EUR/JPY was down by 21 pips (-0.16%) to 131.95, EUR/AUD was down by 30 pips (-0.27%) to 1.1453

GBP

In a repeat performance of yesterday’s price action, the pound managed to edge out the euro and was the worst-performing currency of the morning London session.

Like yesterday, there were no apparent catalysts for the pound’s weakness, but unwinding by pound bulls because of uncertainty related to another round of Brexit talks is a possibility.

GBP/USD was down by 74 pips (-0.55%) to 1.3420, GBP/JPY was down by 34 pips (-0.23%) to 150.22, GBP/NZD was down by 36 pips (-0.19%) to 1.8624

USD

The Greenback reigned supreme during the morning London, even though there were no direct catalysts. It’s is possible, however, that we’re seeing some preemptive positioning because of cautious optimism ahead of Trump’s expected speech on his tax plans tomorrow, as well as scheduled speeches from a bunch of Fed officials which include Fed Chair Yellen herself.

USD/JPY was up by 37 pips (+0.33%) to 111.94, USD/CAD was up by 17 pips (+0.14%) to 1.2392, USD/CHF was up by 21 pips (+0.22%) to 0.9715

Watch Out For:

  • 1:00 pm GMT: French President Macron will speak
  • 1:00 pm GMT: S&P/CS composite HPI (5.7% expected, same as previous)
  • 1:30 pm GMT: Cleveland Fed President Loretta Mester will speak
  • 2:00 pm GMT: CB’s U.S. consumer confidence index (120.0 expected, 122.9 previous)
  • 2:00 pm GMT: U.S. new home sales (588K expected, 571K previous)
  • 2:30 pm GMT: Fed Governor Lael Brainard will speak
  • 4:45 pm GMT: Fed Head Yellen is scheduled to speak