London Session Forex Recap – Dec. 9, 2015

  • Swiss jobless rate: 3.4% as expected, same as previous
  • German current account: €23.0B vs. €23.7B expected, €25.0B previous
  • German trade balance: €22.5B vs. €21.7B expected, €22.8B previous
  • RBNZ rate decision and press conference for later

The forex calendar for today’s morning London trading session was a bit on the light side, so forex traders turned to risk sentiment and European equities for direction.

Major Events:

Commodity rout halts, oil rallies – The broad-based rout in commodities, which has been one of the main themes driving forex price action during this trading week, has finally found some support, with gold up by 0.31% to $1,078.60 per troy ounce during the forex session.

Oil, however, didn’t just find support since it was in full rally mode, with Brent crude oil up by 1.18% to $40.73 per barrel and U.S. crude oil up by 1.48% to $38.06 per barrel during the forex session. Market analysts were pointing to the positive Japanese data from earlier and speculation that the later reading for U.S. crude oil inventories will be lower, hinting at a potential pickup in demand.

Persistent risk aversion – Despite stabilizing commodity prices, European equities were still in the red, with commodity stocks being one of the bigger drags. The pan-European FTSEurofirst 300 was down by 0.36% to 1,432.63 while the Euro Stoxx 50 was down by 0.40% to 3,289.00 during the forex session.

Major Currency Movers:

CAD – The risk-off sentiment that prevailed during the forex session was not kind to the higher-yielding Aussie and Kiwi, although a possible RBNZ rate cut for later and Australia’s jobs report for tomorrow’s Asian forex session (read Forex Gump’s Forex Trading Guide for that event here) were probably weighing-in on the minds of forex traders. Bullish Loonie traders didn’t seem to mind the risk aversion, however, since they probably had their sights dead set on the rallying oil prices.

USD/CAD was up by 19 pips (-0.14%) to 1.3558, AUD/CAD was up by 36 pips (-0.37%) to 0.9767, NZD/CAD was up by 29 pips (-0.32%) to 0.8979

JPY – Risk aversion naturally means demand for the safe-haven currencies (USD, JPY, CHF), and the safe-haven of choice for this forex trading session seems to be the Japanese yen since it was winning out against its fellow safe-haven currencies. There were no clear catalysts that could have convinced forex traders to favor the yen over the other safe-havens, but it’s possible that European forex traders were also pricing-in the positive Japanese economic data from earlier.

USD/JPY was up by 22 pips (-0.18%) to 122.50, NZD/JPY was up by 31 pips (-0.37%) to 81.14, AUD/JPY was up by 35 pips (-0.40%) to 88.27

GBP – The pound’s forex price action was a bit of a mystery since it manged to come out on top againt ALL of its forex rivals despite a lack of catalysts. In fact, some reports that came out during the forex session were actually bad for the U.K. and the pound, such as the British Chamber of Commerce downgrading its growth forecast for 2015 from 2.6% to 2.4%. Also, the risk aversion that plagued the forex session was not exactly a conducive environment for loading up on the high-yielding pound. Well, whatever the case may truly be, the fact remains that the pound was the top dog of today’s morning London forex session.

GBP/USD was down by 50 pips (+0.33%) to 1.5085, GBP/JPY was down by 27 pips (+0.15%) to 184.80, GBP/AUD was down by 116 pips (+0.56%) to 2.0933

Watch Out For:

  • 3:00 pm GMT: U.S. wholesale inventories (0.2% expected, 0.5% previous)
  • 3:30 pm GMT: Crude il inventories (0.7m expected, 1.2M previous)
  • 8:00 pm GMT: RBNZ OCR decision and statement (2.50% expected, 2.75% previous)
  • 8:05 pm GMT: RBNZ press conference
  • 9:45 pm GMT: New Zealand’s credit card spending m/m (0.4% expected, 0.0% previous)

See also:

Asia Session Forex Recap

U.S. Session Forex Recap

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