London Session Forex Recap – Dec. 7, 2015

  • German industrial production m/m: 0.2% vs. 0.7% expected, -1.1% previous
  • Euro Zone Sentix indicator: 15.7 vs. 17.0 expected, 15.1 previous
  • Swiss foreign currency reserves: CHF 563B vs. CHF 552B previous

Not much on the docket for today’s morning London forex session, so forex traders turned to the continuing broad-based rout in commodities for direction.

Major Events:

Commodities getting hammered – The broad-based weakness that plagued commodities during the Asian forex session persisted during the European trading session, with gold down by 0.29% to $1,081.00 per troy ounce. Iron ore was also down by 2.4% to $39.06 per dry metric ton, which is the lowest ever since May 2009. Also, oil was tumbling lower, with Brent crude oil down by 1.05% to $42.55 per barrel and U.S. crude down by 1.74% to $39.27 per barrel during the forex session.

Market analysts attributed the tumble in oil prices to greenback strength and continued disappointment on the Organization of the Petroleum Exporting Countries’ (OPEC) decision to not reign in oil production despite falling oil prices. Incidentally, the stronger U.S. dollar was also probably weighing-in on the other commodities since most commodities are priced in U.S. dollars, so a strong dollar means that commodities are percieved to be more expensive, and some commodity traders were probably using that as an opportunity to unload.

RBNZ rate cut speculationSome market analysts were harping on about a possible rate cut from the Reserve Bank of New Zealand (RBNZ) to explain the Kiwi’s slide during the forex session. But what do you think? Is this just a correction or the markets pricing-in a potential RBNZ rate cut. If y’all recall, I mentioned in my Top Forex Market Movers of the Week for the previous trading week that the Kiwi was one of the biggest winners, so a correction should be expected. Why not share your thoughts by voting in the poll over at Forex Gump’s Monthly Economic Review for New Zealand?

Major Currency Movers:

Comdolls – Commodities were mostly in the red, so the comdolls were naturally under intense bearish pressure from forex traders. Although speculation of an RBNZ rate cut was possibly weighing-down on the Kiwi as well. Interestingly enough, the Kiwi was winning out against the Aussie, with AUD/NZD down by 19 pips (-0.12%) to 1.0924 during the forex session.

AUD/USD was down by 55 pips (-0.75%) to 0.7275, AUD/JPY was down by 57 pips (-0.62%) to 89.82

USD/CAD was up by 69 pips (+0.52%) to 1.3465, GBP/CAD was up by 55 pips (+0.27%) to 2.0284

NZD/USD was down by 43 pips (-0.65%) to 0.6653, NZD/JPY was down by 45 pips (-0.55%) to 82.11

USD – The Greenback was giving all of its forex rivals a beating, probably because forex traders who were betting on an upside surprise for NFP and/or forex traders who wanted to use the NFP to exit their positions were finally exhausted, allowing interest rate junkies to come back and push the Greenback higher ahead of the FOMC statement.

USD/JPY was up by 15 pips (+0.12%) to 123.43, GBP/USD was down by 36 pips (-0.24%) to 1.5065, EUR/USD was down by 47 pips (-0.44%) to 1.0808

Watch Out For:

  • 3:00 pm GMT: BOE Governor Mark Carney will testify before the European Parliament Committee on Economic and Monetary Affairs
  • 8:00 pm GMT: U.S. consumer credit ($19.0B expected, $28.92B previous)
  • 9:45 pm GMT: New Zealand’s manufacturing activity (0.4% previous)

See also:

Asia Session Forex Recap

U.S. Session Forex Recap

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