London Session Forex Recap – Jan. 25, 2016

  • German IFO current conditions: 112.5 vs. 112.8 expected, 112.8 previous
  • German IFO expectations: 102.4 vs. 104.2 expected, 104.6 previous
  • German IFO business climate: 107.3 vs. 108.4 expected, 108.6 previous
  • Italian industrial sales m/m: -1.1% vs. 1.9% previous
  • Italian retail sales m/m: 0.3% vs. 0.2% expected, -0.3% previous
  • U.K. CBI industrial trends: -15 vs. -10 expected, -7 previous

Today’s morning London forex session was a bit subdued, with many currency pairs essentially range-bound. Still, the return of risk-aversion during the session was more than enough to influence overall directional movement.

Major Events:

Oil rally falters – The oil rally that started last week lost steam during today’s morning London forex session, with U.S. crude oil down by 2.72% to $31.33 per barrel and Brent crude oil down by 2.16% to $32.12 per barrel.

According to some market analysts, the sudden souring of sentiment on oil was apparently due to Iraq’s announcement of record-high oil production. Other market analysts, meanwhile, pointed to OPEC head El-Badri’s call to both OPEC members and non-OPEC members to sit down to tackle the oil oversupply issue.

Whichever the true catalysts is, the end result is pretty much the same  – market players were given a much-needed reality check on the oil oversupply situation.

Risk aversion is back – There were moderate amounts of risk-taking during the Asian trading session, but European market players were in a gloomy mood due to the lower oil prices during the forex session, according to many analysts.

The DAX was down 0.01% to 9,764.00 after being in the green earlier while the pan-European FTSEurofirst 300 was down by 0.28% to 1,328.59. U.S. equity futures were also glowing red, with the S&P 500 futures down by 0.18% to 1,896.25 and the Nasdaq futures down by 0.21% to 4,239.00 during the forex session.

Meanwhile, gold and silver, which are go-to assets during times of uncertainty, were enjoying the risk-off session, with gold up by 0.88% to 1,106.00 per troy ounce.

Major Currency Movers:

GBP – The high-yielding pound was in retreat across the board for most of the forex session, likely due to the risk-off sentiment. However, there was a sudden influx of buyers for all pound pairs near the end of the morning London session, which allowed the pound to score victory points against some of the comdolls. The catalyst for the sudden surge in demand is not clear, though.

GBP/USD was down by 14 pips (-0.10%) to 1.4262 with 1.4223 as session low, GBP/NZD was up by 67 pips (+0.30%) to 2.2040 with 2.1942 as session low, GBP/JPY was down by 30 pips (-0.18%) to 168.95 with 168.31 as session low

CAD – Despite the fall in oil prices and the prevalence of risk aversion during the session, the Loonie was able to give most of its forex rivals a good beatdown, which was rather weird since there are no Canadian economic reports for the upcoming U.S. session.

USD/CAD was down by 18 pips (-0.14%) to 1.4166, GBP/CAD was down by 34 pips (-0.17%) to 2.0216, AUD/CAD was down by 22 pips (-0.23%) to 0.9901

NZD – The Loonie may have been getting a some buyers during the trading session, but the risk-off sentiment was bad news for the other comdolls (NZD, AUD), with the Kiwi getting the worse of it.

NZD/USD was down by 23 pips (-0.36%) to 0.6472, NZD/CAD was down by 42 pips (-0.46%) to 0.9170, NZD/CHF was down by 18 pips (-0.28%) to 0.6569

Watch Out For:

  • 2:00 pm GMT: Belgian BB business climate (-1.9 expected, -1.4 previous)
  • 6:00 pm GMT: ECB President Mario Draghi has a speech

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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