The euro got whupped across the board and was the only real mover during today’s steady morning London session.
The Aussie is worth noting as well, however, since it shrugged off the risk-off vibes in Europe and took directional cues from rising gold prices.
- German factory orders m/m: 1.0% vs. -1.1% expected, 3.6% previous
- Swiss CPI m/m: 0.1% as expected vs. 0.2% previous
- French final services PMI: 57.3 vs. unchanged at 57.4 expected
- German final services PMI: 54.7 vs. unchanged at 55.2 expected=
- Euro Zone final services PMI: 55.0 vs. unchanged at 54.9 expected
- Sentix Euro Zone investor confidence: 34.0 vs. 31.2 expected, 29.7 previous
- Euro Zone PPI m/m: 0.6% vs. 0.4% expected, 0.3% previous
ECB’s Praet speaks
ECB Executive Board Member and Chief Economist Peter Praet gave a scheduled speech earlier today.
And in his speech, Praet said that the ECB’s plan to announce a tapered extension “was taken against the backdrop of the solid and broad-based economic expansion which the euro area continues to experience.” In addition, “Deflationary risks have disappeared” in the Euro Zone.
However, he was quick to add that “Some measures of underlying inflation have ticked up over recent months, but have yet to show more convincing signs of a sustained upward trend.”
As such, “the convergence of inflation towards our aim remains conditional on a substantial degree of monetary policy accommodation.”
Praet also reiterated the ECB’s forward guidance on interest rates by saying that the ECB “expects the key ECB policy rates to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases.”
Gloomy start in Europe
Europe is starting the new trading week on a downbeat not since the major European equity indices were all bleeding red by the end of the morning London session.
And the downbeat tone in Europe was due to mainly to poor earnings reports, market analysts say.
- The pan-European FTSEurofirst 300 was down by 0.02% 1,558.03
- Germany’s DAX was down by 0.20% to 13,452.50
- The blue-chip Euro Stoxx 50 was down by 0.24% to 3,679.50
Most commodities were already tilting to the upside during the earlier Asian session. And that evolved into a broad-based rally during today’s morning London.
The Greenback was mixed but mostly weaker during the morning London session, which may have helped to stoke demand for commodities.
However, the risk-off vibes also likely sent safe-haven flows towards precious metals.
Base metals, meanwhile, were propped up by expectations that global demand (Chinese demand in particular) will pick up, according to some market analysts.
As for the rise in oil prices, that was attributed by market analysts to Saudi crown prince Mohammed bin Salman’s purges and reform plans.
Precious metals were in the green.
- Gold was up by 0.18% to $1,271.46 per troy ounce
- Silver was up by 0.25% to $16.876 per troy ounce
Oil benchmarks were also in positive territory.
- U.S. WTI crude oil was up by 0.68% to $56.02 per barrel
- Brent crude oil was up by 0.79% to $62.56 per barrel
Base metals were also in demand, with some base metals clearly outperforming.
- Copper was up by 0.91% to $3.146 per pound
- Nickel was up by 1.42% to $12,882.50 per dry metric ton
Major Market Mover(s):
The euro was already sliding before the morning London session rolled around, even though there were no apparent catalysts.
However, its slide accelerated when ECB’s Praet gave his speech wherein he reiterated the ECB’s cautious forward guidance.
EUR/USD was down by 18 pips (-0.16%) to 1.1590, EUR/NZD was down by 67 pips (-0.40%) to 1.6803, EUR/AUD was down by 57 pips (-0.38%) to 1.5119
The Aussie managed to win out against all its peers during the morning London session and is currently on course to ending up as the best-performing currency of the day.
There were no apparent catalysts for the Aussie’s rise against its forex peers, but gold was on the rise during the session, and the Aussie was very likely taking directional cues from that.
AUD/USD was up by 16 pips (+0.22%) to 0.7665, AUD/CAD was up by 13 pips (+0.14%) to 0.9781, AUD/CHF was up by 6 pips (+0.08%) to 0.7672
Watch Out For:
- 3:00 pm GMT: Ivey’s Canadian PMI (60.2 expected, 59.6 previous)
- 5:10 pm GMT: New York Fed President William Dudley will speak
- 10:30 pm GMT: AIG’s Australian construction index (54.7 previous)