London Session Forex Recap – Jan. 15, 2016

  • U.K. construction output m/m: -0.5% vs. 0.5% expected, 0.2% previous
  • U.K. construction output y/y: -1.1% vs. -0.1% expected, 1.0% previous
  • Euro Zone trade balance: €22.7B vs. €21.0B expected, €19.B previous
  • U.S. retail sales, industrial production, and PPI readings coming up

No top-tier items on the docket for today’s morning London trading session, so forex traders turned to risk sentiment for direction, resulting in another lopsided battle between the safe-havens and the higher-yielders.

Major Events:

Oil tumbles to fresh intraweek lows– Oil prices resumed their slide during today’s morning London forex session, with both U.S. crude oil and Brent crude oil both making fresh intraweek lows on speculation that the International Atomic Energy Agency (IAEA) may be reporting that Iran has complied with the measures on its nuclear program as early as today. This could open the way for Iran’s entry into the oil market which may potentially worsen the oil glut. U.S. crude oil was down by 5.14% to $29.65 per barrel with $29.41 as session low while Brent crude oil was down by 3.81% to $29.71 per barrel with $29.44 as session low.

Risk aversion reigns supreme – The continuing slump in oil prices mean that risk aversion was the name of the game during the European forex session, with the DAX down by 1.13% to 9,690.30 and the Pan-European FTSEurofirst 300 down by 1.60% to 1,313.07. U.S. equity futures are also hinting at a red day for the upcoming U.S. trading session since the S&P 500 futures was down by 1.66% to 1,883.25 while the Nasdaq futures was down by 1.88% to 4,177.62.

Major Currency Movers:

Safe-havens – The prevailing risk-aversion convinced forex traders to flee to the safe-haven currencies (JPY, USD, CHF) for protection, with the Japanese yen being the safe-haven of choice for most forex traders.

USD/JPY was down by 32 pips (-0.27%) to 117.31, CHF/JPY was down by 23 pips (-0.20%) to 116.79, GBP/JPY was down by 90 pips (-0.54%) to 168.26

USD/CHF was down by 9 pips (-0.09%) to 1.0041, NZD/CHF was down by 52 pips (-0.81%) to 0.6414, GBP/CHF was down by 54 pips (-0.37%) to 1.4403

Comdolls Oil made fresh intraweek lows? Risk aversion was the name of the game? If you immediately guessed that the comdolls (AUD, CAD, NZD) were getting hammered during the forex session, then you guessed right. Interestingly enough, the Aussie and not the Loonie was the main victim during the session despite the slump in oil prices and a lack of catalysts for Australia. Heck, the Aussie even lost out to its fellow comdolls.

NZD/USD was down by 46 pips (-0.71%) to 0.6388, NZD/CAD was down by 48 pips (-0.52%) to 0.9261, NZD/JPY was down by 76 pips (-1.00%) to 74.94

AUD/USD was down by 53 pips (-0.76%) to 0.6877, AUD/NZD was down by 16 pips (-0.15%) to 1.0762, AUD/JPY was down by 87 pips (-1.07%) to 80.63

USD/CAD was up by 31 pips (+0.21%) to 1.4498, AUD/CAD was down by 54 pips (-0.55%) to 0.9969, EUR/CAD was up by 98 pips (+0.63%) to 1.5824

EUR The squeeze on European equities was probably causing strong capital flows to the lower-yielding euro since it managed to beat all of its forex rivals, with the Japanese yen being the sole exception.

EUR/USD was up by 42 pips (+0.39%) to 1.0911, EUR/NZD was up by 184 pips (+1.09%) to 1.7074, EUR/GBP was up by 52 pips (+0.69%) to 0.7608

Watch Out For:

  • 1:30 pm GMT: U.S. Empire State survey (-4.0 expected, -4.6 previous)
  • 1:30 pm GMT: U.S. headline (0.1% expected, 0.2% previous) and core (0.2% expected, 0.4% previous) retail sales
  • 1:30 pm GMT: U.S. headline (-0.2% expected, 0.3% previous) and core (0.1% expected, 0.3% previous) PPI
  • 2:00 pm GMT: New York Fed William Dudley is scheduled to speak
  • 2:15 pm GMT: U.S. industrial production (-0.2% expected, -0.6% previous)
  • 2:15 pm GMT: U.S. capacity utilization (76.8% expected, 77.0% previous)
  • 3:00 pm GMT: The preliminary result for the University of Michigan’s consumer sentiment survey (92.9 expected, 92.6 previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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