London Session Forex Recap – Nov. 9, 2015

  • German trade surplus: €22.9B vs. €21.0B expected, €15.4B previous
  • German current account: €25.1B vs. €21.9B expected, €13.3B previous
  • French BoF Business Sentiment: 99 vs. 98 expected, 97 previous
  • Euro Zone Sentix indicator: 15.1 vs. 13.1 expected, 11.7 previous

Monday’s morning London forex session was rather subdued, probably because there weren’t any top-tier reports or events during the session. That didn’t stop currency pairs from grinding along, however.

Major Events:

Positive euro zone data points – The euro zone got a slew of positive data during the forex session, with French business sentiment, the Sentix economic index, and German current account all coming in better-than-expected. Germany’s trade surplus came in better-than-expected as well, but the seasonally-adjusted reading was actually a disappointment (€19.4B vs. €20.3B expected, €19.6B previous) due to imports (+3.6%) rising faster than exports (+2.6%).

Mostly risk-off session – Risk aversion spread through European equities like a plague, with the pan-European FTSEurofirst 300 down by 0.36% to 1,493.54 and the DAX down by 0.40% to 10,944.00. US equity futures were getting a dose of risk aversion as well, with the S&P 500 futures down by 0.32% to 2,087.00 and NASDAQ futures down by 0.23% to 4,692.12.

Commodities rally – European equities and U.S. equity futures were clearly indicating signs of risk aversion during the forex session. But that was not the case with the commodities market since most commodities were on the up and up, with oil prices leading the way due to a statement from OPEC that global demand is expected to remain strong next year. Brent crude oil was up by 1.57% to $48.92 per barrel while U.S. crude was up by 1.40% to $44.91 per barrel during the forex session.

Direct trade between Chinese yuan and Swiss franc – There have been rumors about this since early October, but the People’s Bank of China (PBoC) officially announced during the forex session that it would allow direct trading between the Chinese yuan and the Swiss franc starting on Tuesday. According to the Google-translated announcement, the purpose of this setup is to “reduce the economic costs of the main exchange” and to “promote further development of bilateral trade and economic relations.”

Major Currency Movers:

Comdolls – Most comdoll pairs were feeling a bit under the weather during the start of the forex session, probably because of the prevailing risk-off sentiment, which is not exactly the ideal environment for forex traders to load up on the high-yielding comdolls. The broad-based commodity rally later helped to convince forex traders to finally give the comdolls the love that they deserve, however.

AUD/USD is up by 13 pips (+0.20%) to 0.7062, AUD/JPY is up by 23 pips (+0.27%) to 87.19, AUD/CHF is up by 30 pips (+0.43%) to 0.7083

USD/CAD is down by 22 pips (-0.17%) to 1.3257, CAD/JPY is up by 23 pips (+0.25%) to 93.14, CAD/CHF is up by 30 pips (+0.41%) to 0.7564

NZD/USD is up by 10 pips (+0.15%) to 0.6559, NZD/JPY is up by 15 pips (+0.19%) to 80.96, NZD/CHF is up by 22 pips (+0.34%) to 0.6575

EUR – Euro pairs were edging higher against the safe havens during the forex session (while remaining flat or losing out to the comdolls), thanks likely to the slew of positive data that I mentioned earlier, and forex traders also didn’t seem to mind the poor seasonally-adjusted reading for Germany’s trade data. The overall risk aversion was also probably giving the low-yielding euro a boost due to capital flows from market players unwinding their positions in European equities.

EUR/USD is up by 17 pips (+0.16%) to 1.0782, EUR/JPY is up by 30 pips (+0.23%) to 133.12, EUR/CHF is up by 39 pips (+0.37%) to 1.0811

CHF – The Swissy got a volatility injection and started strengthening across the board during the German open when the PBoC announced its plan to allow direct trade between the Chinese yuan and the Swiss franc. Most Swissy pairs quickly gave back their gains, however, with some ending the forex session flat while others ended the session with some losses.

USD/CHF dropped 39 pips (-0.40%) to 1.0048 during the German open, but began climbing up during the London open to end the session up by 28 pips (+0.28%) to 1.0034 from the London open

Watch Out For:

  • Canadian housing starts (200.0K expected, 230.7K previous) at 1:15 pm GMT
  • New Zealand’s retail card sales (0.3% expected, 0.9% previous) at 9:45 pm GMT

See also:

Asia Session Recap

U.S. Session Recap

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