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Lots of volatility, but not much in terms of directional movement during today’s morning London session.

The Greenback was an exception, though, since it clawed its way higher across the board after suffering losses earlier, so much so that the Greenback is now a net winner for the day (so far).

However, the Greenback’s fate is not yet set in stone since there are two top-tier U.S. economic reports coming up.

  • Swiss PPI m/m: 0.5% vs. 0.3% expected, 0.3% previous
  • Swiss PPI y/y: 0.8% vs. 0.6% expected, 0.6% previous
  • German final HICP m/m: unchanged at 0.1% as expected
  • German final HICP y/y: unchanged at 1.8% as expected
  • U.S. CPI and retail sales reports coming up

Major Events/Reports

Commodities rally but precious metals sink

Most commodities were in rally mode during today’s morning London session. However, the rally wasn’t across the board since precious metals got left behind, very likely because of the risk-on vibes in Europe.

Unfortunately, market analysts couldn’t pinpoint the reason for the commodities rally.

And we can’t really point to Greenback weakness since the Greenback was in rally mode during the morning London session. In fact, the U.S. dollar index was already up by 0.13% to 93.06 for the day when the session ended.

Some market analysts do say, however, that the oil rally was likely due to stronger Chinese oil imports, as well as earlier news that Kurdish fighters have gathered in the oil-rich region of Kirkuk in Iraq, which may potentially cause a supply disruption.

Base metals were broadly in the green.

  • Copper was up by 0.32% to $3.130 per pound
  • Aluminum was up by 0.44% to $2,159.75 per dry metric ton

Oil benchmarks clearly outperformed.

  • U.S. WTI crude oil was up by 2.04% to $51.63 per barrel
  • Brent crude oil was up by 2.20% to $57.49 per barrel

As mentioned earlier, precious metals got left behind.

  • Gold was down by 0.11% to $1,295.09 per troy ounce
  • Silver was down by 0.16% to $17.239 per troy ounce

Risk-taking ahead of top-tier U.S. data

The major European equity indices were raking in gains during the morning London session, so Europe is currently on course to end the trading week on an upbeat note.

And according to market analysts, basic materials outperformed so the commodities rally likely helped to improve overall sentiment in Europe. Other than that, positive earnings updates and the general “feel good” vibes because of Bayer’s plans to acquire Monsanto were also cited as the main reasons for the risk-friendly environment in Europe today.

  • The pan-European FTSEurofirst 300 was up by 0.41% to 1,540.20
  • Germany’s DAX was still up by 0.41% to 13,036.50
  • The blue-chip Euro Stoxx 50 was up by 0.36% to 3,618.50

U.S. equity futures also got a lift, signaling that the risk-on vibes may carry over into the U.S. session.

  • S&P 500 futures were up by 0.12% to 2,552.50
  • Nasdaq futures were up by 0.15% to 6,083.63

Major Market Mover(s):

USD

The Greenback was the best-performing currency of the morning London session.

There were no apparent catalysts for the Greenback’s strength, but the Greenback did suffer losses since the FOMC minutes were released, and it’s possible that some Greenback shorts were just covering their positions ahead of the U.S. CPI and retail sales reports for later. Preemptive positioning is also a possibility of course.

By the way, you may wanna check out Forex Gump’s Two Top-Tier Reports For Your USD Trades This Friday, if you want to get up to speed on what’s expected for the U.S. CPI and retail sales reports.

USD/JPY was up by 26 pips (+0.24%) to 112.21, USD/CAD was up by 28 pips (+0.23%) to 1.2492, USD/CHF was up by 20 pips (+0.21%) to 0.9769

Watch Out For:

  • 12:30 pm GMT: Headline (+0.6% expected, +0.4% previous) and core (+0.2% expected, same as previous) readings for U.S. CPI
  • 12:30 pm GMT: Headline (+1.7% expected, -0.2% previous) and core (+0.9% expected, +0.2% previous) readings for U.S. retail sales
  • 1:30 pm GMT: CB’s U.K. leading index (-0.1% previous)
  • 2:00 pm GMT: University of Michigan’s consumer sentiment index (95.0 expected, 95.1 previous)
  • 2:15 pm GMT: ECB’s Constancio will be speaking
  • 2:25 pm GMT: Chicago Fed President Charles Evans will speak
  • 3:30 pm GMT: Dallas Fed President Robert Kaplan is scheduled to speak