- UBS Swiss consumption indicator: 1.66 vs. 1.61 previous
- French INSEE consumer confidence: 95 vs. 97 expected, 97 previous
- U.K. BBA mortgage approvals: 47.51K vs. 45.00K expected, 43.66K previous
- UK CBI distributive trades: 10% vs. 12% expected, 16% previous
Risk aversion reigned supreme during today’s morning London forex session, so the safe-haven currencies were able to score another very lopsided victory against the higher-yielders. The pound, meanwhile, was getting pounded by Brexit jitters.
Oil gets crushed – Oil benchmarks were broadly in negative territory during the morning London trading session, thanks to continuing disappointment over Saudi Oil Minister Ali Al-Naimi’s earlier comments that cutbacks on oil production “is not going to happen” and that “There is no sense in wasting our time seeking production cuts,” referring to other oil producers. He did say that he expects most oil producers to agree to freeze production at January levels, but that optimistic rhetoric didn’t seem to matter to most market players, probably because Iran is refusing to play along.
U.S. crude oil was slumped by 3.58% to $30.73 per barrel while Brent crude oil was down by 2.46% to $32.45 per barrel during the morning London session.
Risk aversion domination – Feelings of doom and gloom reigned supreme during the morning London session, pulling the pan-European FTSEurofirst 300 down by 2.16% to 1,261.17 while the DAX tumbled by 2.54% to 9,182.50 during the morning London session. The risk-off environment is threatening to spread into the U.S. session since U.S. equity futures were printing losses, with the S&P 500 futures down by 0.94% to 1,898.00 and the Nasdaq futures down by 1.34% to 4,103.38 during the session. On the flip side, gold shone like a candle in the darkness, attracting enough scared (or wise) market players to push gold 1.15% higher to $1,236.60 per troy ounce during the morning London session.
The risk-off environment was widely attributed to the slump in oil prices, with European commodities stocks getting burned the most. Incidentally, this correlation between stocks and oil prices was touched upon by Forex Gump in his Quick Primer and Some Updates on Oil, so go ahead and check it out to learn more.
Brexit fears drown the pound – Pound pairs weakened across the board during the morning London session even though there weren’t any major catalysts. Pretty much every financial news outlet from Reuters, to the Financial Times, to Bloomberg were pointing to continuing jitters over a potential Brexit. I mean, most people would get Brexit heebie-jeebies when they read headlines like “Brexit could wipe 20% off the pound, warns HSBC,” right?
Major Currency Movers:
GBP – The pound weakened against all its forex rivals right from the start, ending the session as the doormat upon which the other currencies may wipe their (figurative) feet.
GBP/USD was down by 82 pips (-0.58%) to 1.3901, GBP/JPY was down by 123 pips (-0.80%) to 155.52, GBP/CAD was down by 52 pips (-0.27%) to 1.9229
Safe-havens – The safe-haven currencies (JPY, CHF, USD) were able to win another major victory, especially against the higher-yielding comdolls, thanks to the prevailing risk-off sentiment. Among the three, the Greenback was the weakest since it lost out to the other safe-havens. As for the title of ultimate victor, that goes to the Japanese yen, although it barely won out against the Swissy (during the morning London session at least).
USD/JPY was down by 23 pips (-0.21%) to 111.88, CAD/JPY was down by 45 pips (-0.56%) to 80.84
USD/CHF was down by 13 pips (-0.13%) to 0.9933, AUD/CHF was down by 29 pips (-0.41%) to 0.7113
AUS/USD was down by 20 pips (-0.27%) to 0.7160, NZD/USD was down by 14 pips (-0.22%) to 0.6596
CAD – The higher-yielding comdolls (AUD, CAD, NZD) got little love from forex traders during the morning London forex session. And the Loonie got the least love from forex traders, thanks to slumping oil prices. Well, that’s better than how the pound fared at least.
USD/CAD was up by 45 pips (+0.33%) to 1.3835, AUD/CAD was up by 11 pips (+0.10%) to 0.9911, NZD/CAD was up by 17 pips (+0.19%) to 0.9133
EUR – Under normal circumstances, a risk-off environment and a broad selloff in European equities usually pushes the lower-yielding euro higher. However, the euro was trading sideways against the comdolls while getting a severe beating from the safe-havens. The euro only clearly won out against the super weak pound. This weird behaviour was likely because of concerns that a Brexit would have a negative impact on the euro zone as well.
EUR/USD was down by 21 pips (-0.20%) to 1.0975, EUR/CHF was down by 34 pips (-0.31%) to 1.0905, EUR/GBP was up by 31 pips (+0.40%) to 0.7895
- 2:45 pm GMT: Markit’s flash services PMI (53.4 expected, 53.2 previous)
- 3:00 pm GMT: U.S. new home sales (522K expected, 544K previous)
- 3:30 pm GMT: U.S. crude oil inventories (2.0M expected, 2.1M previous)
- 5:50 pm GMT: BOC Deputy Governor Lawrence Schembri has a speech; text will be available here
- 6:10 pm GMT: BOE Deputy Governor Jon Cunliffe scheduled to talk; text will will be released here
- 9:45 pm GMT: New Zealand visitor arrivals (-1.3% previous)
- 9:45 pm GMT: New Zealand external migration (5.51K previous)
Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.
Head on to Big Pippin’s Daily Chart Art for some pip-locking technical weeks!