London Session Forex Recap – Dec. 14, 2015

  • Euro Zone industrial production m/m: 0.6% vs. 0.3% expected, -0.3% previous
  • Euro Zone industrial production y/y: 1.9% vs. 1.4% expected, 1.3% previous
  • Italian HICP m/m: -0.4% vs. -0.5% expected, -0.4% previous
  • Italian HICP y/y: 0.2% vs. 0.1% expected, 0.1% previous

Today’s morning London forex session only had a couple of low-tier items on tap, but that didn’t mean a quiet trading session since forex traders turned once again to risk sentiment and slumping oil prices for direction.

Major Events:

Commodity carnage continues – Most commodities were in the red again during the forex session, with gold down by 0.62% to $1,069.00 per troy ounce. Oil, in particular, was slumping very hard to 11-year lows, with Brent crude oil down by 2.86% to $37.22 per barrel and U.S. crude oil down by 2.46% to $34.75 per barrel during the forex session.

Market analysts were pointing to continued oversupply concerns, especially with regard to Iran’s expected entry (or reentry) into the global oil market once the sanctions are lifted.

Risk-off sentiment… again – The risk aversion from last week just won’t let up since the pan-European FTSEurofirst 300 was down by 0.30% to 1,393.34 and the DAX was down by 1.19% to 10,219.00 for the forex session. And it looks like the risk-off sentiment is gonna carry over into the upcoming U.S. forex session as well, with the S&P 500 futures down by 0.37% to 1,993.88 and Nasdaq futures down by 0.27% to 4,520.40.

Most market analysts attributed the prevailing risk-off sentiment to the continuing commodity rout, especially slumping oil prices, the Chinese yuan being at its lowest since July 2011, and jitters ahead of this week’s FOMC statement.

Major Currency Movers:

CHF & JPY – The overwhelming risk aversion that prevailed during the forex session naturally meant high demand for the safe-haven currencies (USD, JPY, CHF). Strangely enough, demand for the Greenback was lackluster, which is the same behavior I noted in last week’s Top Forex Market Movers of the Week. Are forex traders who are betting on a rate hike liquidating their Greenback longs already?

USD/CHF was down by 32 pips (-0.33%) to 0.9813, EUR/CHF was down by 22 pips (-0.20%) to 1.0771, GBP/CHF was down by 102 pips (-0.69%) to 1.4841

USD/JPY was down by 47 pips (-0.39%) to 120.75, AUD/JPY was down by 49 pips (-0.56%) to 86.94, EUR/JPY was down by 41 pips (-0.31%) to 132.48

CAD – Oil prices at 11-year lows? Dump the Loonie, baby! And that’s what forex traders were probably thinking (and doing). If you don’t understand why, then you should read up on our School’s lesson on How Oil Affects USD/CAD.

USD/CAD was up by 58 pips (+0.43%) to 1.3764, EUR/CAD was up by 107 pips (+0.72%) to 1.5129, NZD/CAD was up by 72 pips (+0.79%) to 0.9276

NZD – The one-two punch from slumping commodity prices and overbearing risk aversion was sending the Aussie, and especially the Loonie, lower across the board. The Kiwi was unfazed, however, since it was pushing its way higher for the most part, even though there weren’t any catalysts that could have convinced forex traders to start loading up on the Kiwi.

NZD/USD was up by 27 pips (+0.41) to% 0.6743, GBP/NZD was down by 162 pips (-0.72%) to 2.2434, AUD/NZD was down by 53 pips (-0.50%) to 1.0683

Watch Out For:

  • 3:00 pm GMT: ECB’s Carlos Costa has a speech

See also:

Asia Session Forex Recap

U.S. Session Forex Recap

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