London Session Forex Recap – Dec. 15, 2015

  • Swiss PPI m/m: 0.4% vs. -0.1% expected, 0.2% previous
  • Swiss PPI y/y: -5.5% vs. -6.1% expected, -6.6% previous
  • U.K. CPI m/m: 0.0% vs. -0.1% expected, 0.1% previous
  • U.K. CPI y/y: 0.1% as expected vs. -0.1% previous
  • U.K. core CPI y/y: 1.2% as expected vs. 1.1% previous
  • German ZEW economic sentiment: 16.1 vs. 15.0 expected, 10.5 previous
  • German ZEW current conditions: 55.0 vs. 54.2 expected, 54.4 previous
  • Euro Zone ZEW economic sentiment: 33.9 vs. 34.4 expected 28.3 previous
  • U.S. CPI coming up
  • Diary auction currently underway

Risk appetite came back in force during today’s morning London forex session while oil continued its climb, so the safe-havens and the low-yielding euro got pushed back, particularly by the Loonie and the pound.

Major Events:

Oil relief rally continues – Oil continued rallying during today’s morning London forex session, with U.S. crude oil up by 1.25% to $36.77 per barrel and Brent crude oil up by 1.47% to $38.72per barrel. Most market analysts attributed the relief rally to technical buying after oil prices dipped close to 11-year lows yesterday. Although it also probably helped that OPEC Secretary-General Abdullah al-Badri said during the forex session that oil prices will start going up in a few months (up to a year) as the oil price cycle continues to squeeze high-cost oil producers out of the market.

Risk appetite returns in force! – Some risk-taking showed up briefly during yesterday’s U.S. forex session, but was quickly banished when today’s Asian forex session rolled in. European market players were more optimistic, however, since risk appetite managed to return in force, with the pan-European FTSEurofirst 300 up by 1.98% to 1,398.87 and the DAX up by a very solid 2.34% to 10,376.50. U.S. equity futures were also in the green with the S&P 500 futures up by 0.88% to 2,027.25 and the Nasdaq futures up by 0.75% to 4,594.50.

Uptick in U.K. CPI – As expected, annualized headline CPI in the U.K. ticked higher by 0.1% in November after dipping by 0.1% back in October. The main drivers for the uptick were transport prices falling at a slower rate (-0.7% recent vs. -1.2% previous) together with alcoholic beverages and tobacco (-0.1 recent vs. -1.2% previous). This was partially offset mostly by a 0.1% decline in clothing and footwear prices after a rise of 0.7% previously.

Major Currency Movers:

CHF, JPY, & EUR – The safe-haven yen and Swissy, as well as the low-yielding euro, were out of luck (and buyers) during today’s morning London forex session, probably because market players were dumping ’em in favor of European equities.

USD/CHF was up by 45 pips (+0.46%) to 0.9850, CAD/CHF was up by 41 pips (+0.58%) to 0.7191

USD/JPY was up by 53 pips (+0.44%) to 121.14, CAD/JPY was up by 49 pips (+0.56%) to 88.44

EUR/USD was down by 54 pips (-0.49%) to 1.0998, EUR/GBP was down by 36 pips (-0.50%) to 0.7259

CAD – The continuing rally in oil prices and the overall risk-on sentiment were a real boon for the higher-yielding Loonie since they convinced forex traders to load up on the Loonie. The other high-yielding comdolls (Kiwi and Aussie) didn’t get as much lovin’ from forex traders despite the risk-on sentiment, however, probably because most commodities were still in the red. And in the Kiwi’s case, a dairy trade is currently under way, so forex traders were probably avoiding the Kiwi.

USD/CAD was down by 17 pips (-0.13%) to 1.3694, AUD/CAD was down by 23 pips (-0.24%) to 0.9908, NZD/CAD was down by 37 pips (-0.40%) to 0.9304

GBP – The pound started the forex session mixed but started getting buyers across the board after latest CPI reading was released. The aforementioned CPI reading was within expectations, though, which is probably why demand for the pound wasn’t that high after that. The pound did win out against most of its forex rivals, however, with the Loonie being the only exception.

GBP/USD was up by 8 pips (+0.05%) to 1.5157, GBP/JPY was up by 88 pips (+0.49%) to 183.61, GBP/CHF was up by 73 pips (+0.50%) to 1.4927

Watch Out For:

  • 1:30 pm GMT: U.S. headline (0.0% expected, 0.2% previous) and core (0.2% expected, 0.2% previous) CPI readings
  • 1:30 pm GMT: U.S. Empire State manufacturing index (-5.7 expected, -10.7 previous)
  • 1:30 pm GMT: Canadian manufacturing sales (-0.5% expected, -1.5% previous)
  • 3:00 pm GMT: U.S. NAHB builders survey (63 expected, 62 previous)
  • 4:45 pm GMT: BOC Governor Stephen Poloz has a press conference
  • 9:45 pm GMT: New Zealand’s current account (-4.86 NZD billion expected vs. -1.22 NZD billion previous)
  • 11:30 pm GMT: RBA Assistant Governor Guy Debelle will a speak in a Sydney conference
  • Dairy trade currently underway (+3.6% previous); usually done by 2:00 pm GMT; previous auction ended at around 2:24 pm GMT.

See also:

Asia Session Forex Recap

U.S. Session Forex Recap

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