London Session Forex Recap – Feb. 17, 2016

  • U.K. jobless rate: 5.1% vs. 5.0% expected, 5.1% previous
  • U.K. claimant count change: -14.8K vs. -3.0K expected, -15.2K previous
  • U.K. average earnings: 1.9% as expected vs. 2.0% previous
  • Swiss ZEW economic expectations: -5.9 vs. -3.0 previous

Risk appetite made a comeback during today’s morning London forex session, so the higher-yielding currencies were able to turn the tide of the forex battle and gave the safe-havens their comeuppance.

Major Events:

Positive U.K. jobs report – The United Kingdom’s jobless rate for the October-December 2015 period held steady at 5.1%, missing expectations that it would tick lower to 5.0%. However, the inactivity rate (the proportion of people aged from 16 to 64 who were economically inactive) ticked lower from 21.9% to 21.8%, which means that the British economy was able to absorb the influx of people who decided to join or rejoin the labor force, which is great.

Also, the number of people claiming unemployment-related benefits was reduced by a much bigger figure than anticipated and the previous reading was revised from -4.3K to -15.2K to boot. And while total wage growth slowed down from 2.0% to 1.9%, a closer look at the details shows that the slowdown was due to smaller bonuses, and that regular wages actually ticked higher from 1.9% to 2.0%. Overall, a rather positive jobs report.

OPEC head will try to convince others to freeze oil output – OPEC president Mohammed al-Sada is currently in a meeting with oil ministers from Iran and Iraq in order to try and convince the two countries to join a deal with Russia and Saudi Arabia (among others) to limit oil production at January levels. The deal is meant to stop the continuing decline in oil prices, but Mehdi Asali, Iran’s OPEC envoy, already said earlier that “Asking Iran to freeze its oil production level is illogical.”

Nevertheless, rampant speculation during the session caused oil benchmarks to rally hard, with U.S. crude oil charging 2.26% higher to $29.70 per barrel while Brent crude oil surged by 3.00% to $33.14 per barrel.

Market sentiment flips back to risk-on – Risk sentiment has been switching back and forth between risk-on and risk-off every time a new trading session rolls around. And for today’s morning London session, market sentiment switched back to risk-on after a very risk-off Asian session. Climbing oil prices that dragged other commodities higher was likely a factor for improving sentiment, but market analysts also pointed to positive reports for individual companies.

The pan-European FTSEurofirst 300 is up by a respectable 1.74% to 1,284.01 while the DAX was up by a solid 1.71% to 9,291.30. Gold is now down by 0.42% to $1,203.10 per troy ounce after reaching a high of $1,212.60 earlier. U.S. equity futures were also able to recover from earlier losses, with the S&P 500 futures currently up by 0.64% to 1,900.75 and the Nasdaq futures up by 0.66% to 4,119.62 during the forex session.

Major Currency Movers:

GBP – Pound pairs surged higher when the overall positive jobs report came out. But the pound’s forex price action began to diverge after that since the higher-yielding pound was able to hold onto its gains against the safe-havens, but it slowly succumbed to the overwhelming demand for the comdolls as the forex session progressed.

GBP/USD was up by 50 pips (+0.35%) to 1.4313, GBP/JPY was up by 151 pips (+0.94%) to 163.38

GBP/CAD was down by 25 pips (-0.13%) to 1.9763 with 1.9830 as session high, GBP/AUD was down by 18 pips (-0.10%) to 2.0060 with 2.0163 as session high

Comdolls – The prevailing risk-on sentiment and a broad-based commodities rally gave the comdolls enough “oomph” to smack the safe-havens around. Among the comdolls, the Loonie was the strongest of them all since it was able to win out against its fellow comdolls. Heck, the Loonie was winning out against ALL its forex rivals, but it only barely won against the Aussie.

AUD/USD was up by 29 pips (+0.41%) to 0.7132, AUD/NZD was up by 29 pips (+0.27%) to 1.0813

NZD/USD was up by 10 pips (+0.15%) to 0.6595, NZD/JPY was up by 56 pips (+0.75%) to 75.28

USD/CAD was down by 61 pips (-0.44%) to 1.3811, NZD/CAD was down by 27 pips (-0.30%) to 0.9108

JPY – The Japanese yen is usually the go-to safe-haven of choice for most forex traders, so the risk-taking that took place during the session was completely toxic for the yen, and the yen ended up being the weakest currency of them all. The poor yen even lost out to its fellow safe-havens. Poor, poor yen.

USD/JPY was up by 70 pips (+0.62%) to 114.16, CHF/JPY was up by 30 pips (+0.27%) to 115.28, CAD/JPY was up by 87 pips (+1.06%) to 82.66

Watch Out For:

  • 1:30 pm GMT: U.S. building permits (1.20M expected, 1.23M previous)
  • 1:30 pm GMT: U.S. housing starts (1.17M, 1.15M previous)
  • 1:30 pm GMT: Headline (-0.2% expected, -0.2% previous) and core (0.1% expected, 0.1% previous) readings for U.S. PPI
  • 2:15 pm GMT: U.S. capacity utilization (78.7% expected, 76.5% previous)
  • 2:15 pm GMT: U.S. industrial production (0.4% expected, -0.4% previous)
  • 7:00 pm GMT: FOMC meeting minutes will be released
  • 9:45 pm GMT: New Zealand’s PPI input (1.6% previous)
  • 9:45 pm GMT: New Zealand’s PPI output (1.3% previous)
  • 11:00 pm GMT: St. Louis Fed President James Bullard has a speech

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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