London Session Forex Recap – September 7, 2015

  • German Industrial Production m/m: 0.7% actual v.s. 1.1% expected, -0.9% previous
  • German Industrial Production y/y: 0.5% actual v.s. 0.2% expected, 0.9% previous
  • Swiss Foreign Currency Reserves: CHF 540B actual v.s. CHF 531B previous
  • Sentix Investor Confidence: 13.6 actual v.s. 16.0 expected, 18.4 previous
  • Labor Day Holiday for Canada and the U.S. today

Despite another round of losses for Chinese equities, with the Shanghai composite index down by 2.52% for the day, European equities markets were broadly in the green during today’s morning London forex session, as risk appetite made a comeback. But how did the forex market perform?

The greatest beneficiary of the risk-on sentiment during the forex session was the high-yielding pound, which gave all of its forex rivals a good thrashing. In addition, the FTSE 100 was up by 0.37% to 6,065.50 during the forex session, so demand for the pound likely got an extra boost from that.

GBP/USD is up by 74 pips (+0.49%) to 1.5262, GBP/JPY is up by 108 pips (+0.58%) to 182.18, GBP/CAD is up by 138 pips (+0.69%) to 2.0280

As for the other high-yielders, the Aussie was grinding higher while the Loonie was slowly sinking lower. The Kiwi, meanwhile, was mostly flat.

With regard to the Aussie, European forex traders were probably pricing-in the positive data from earlier, namely the AIG construction index jumping to 53.8 from 47.1 and the ANZ job advertisement survey showing a 1.0% increase in job ads (-0.5% previous), although the Aussie’s gains was probably capped because of concerns over China given that Chinese equities were in the red again.

AUD/USD is up by 7 pips (+0.11%) to 0.6939, AUD/CHF is up by 18 pips (+0.27%) to 0.6759, AUD/NZD is up by 40 pips (+0.36%) to 1.1083

As for the Loonie, well, it probably got hammered by another round of declining oil prices, with Brent crude oil down by 1.02% to $49.11 per barrel during the forex session.

USD/CAD is up by 26 pips (+0.20%) to 1.3288, AUD/CAD is up by 25 pips (+0.28%) to 0.9219, EUR/CAD is up by 41 pips (+0.28%) to 1.4812

Moving on, forex traders were naturally avoiding or dumping the safe-haven currencies, but the Swissy was particularly weak during the forex session, probably because Switzerland’s foreign currency reserves ballooned by about 9 billion Swiss francs. This probably sent alarm bells ringing in the minds of many forex traders since the increase most likely means that the Swiss National Bank has been manipulating the forex market again in an attempt to weaken the Swissy.

USD/CHF is up by 23 pips (+0.24%) to 0.9750, GBP/CHF is up by 101 pips (+0.69%) to 1.4874, EUR/CHF is up by 32 pips (+0.30%) to 1.0866

With regard to the euro, it was slightly up for the forex session, losing out only to the pound and about flat against the Aussie. The euro probably got a boost from Germany’s industrial production posting a monthly expansion albeit less-than-expected. The prevailing risk-on sentiment also sent the DAX higher by around 0.56% to 10,094.50, boosting demand for the euro in the process. Although some euro pairs began to encounter sellers shortly after the Sentix indicator printed a less-than-expected figure.

EUR/USD is up by 12 pips (+0.11%) to 1.1150, EUR/AUD is down by 4 pips (-0.03%) to 1.6062, EUR/GBP is down by 29 pips (-0.40%) to 0.7304

We’ve got an empty forex calendar for the upcoming afternoon London/morning U.S. session and both Canadian and the U.S. forex traders are away for the Labor Day holiday, so expect volatility to thin out in the upcoming session.

The reading for New Zealand’s manufacturing activity (-2.8% previous) is expected to come out way late into the U.S. session at around 11:45 pm GMT, though, so make sure to keep an eye on the Kiwi. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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