London Session Forex Recap – Mar. 9, 2016

  • French BoF business sentiment: 98 vs. 101 expected, 101 previous
  • U.K. industrial production m/m: 0.3% vs. 0.4% expected, -1.1% previous
  • U.K. industrial production y/y: 0.2% vs. 0.0% expected, -0.2% previous
  • U.K. manufacturing production m/m: 0.7% vs. 0.2% expected, -0.3% previous
  • U.K. manufacturing production y/y: -0.1% vs. -0.7% expected, -1.7% previous
  • BOC and RBNZ rate decision for later

Risk appetite made a comeback during today’s morning London forex session, so the higher-yielding comdolls got a lot of love while the lower-yielders got crushed.

Major Events:

Oil climbs higher – Oil benchmarks were in full rally mode during the morning London session. According to some analysts, the rally was due to speculation that the upcoming March 20 meeting between oil producers to freeze oil output at January levels will be a success.

U.S. crude oil was up by 2.14% to $37.28 per barrel during the morning London session while Brent blend crude was up by 2.30% to $40.56 per barrel.

Risk appetite returns – After three days of doom and gloom, risk appetite finally returned to the markets during today’s morning London session, with the pan-European FTSEurofirst 300 was up by 1.11% to 1,344.13 while the DAX was up by a solid 1.51% to 9,836.50.

U.S. equity futures were also in the green, with the S&P 500 futures up by 0.44% to 1,989.75 and Nasdaq futures up by 0.52% to 4,292.50 during the morning London session. In addition, gold, which is the traditional safe-haven, was down by 0.67% to $1,254.50 per troy ounce during the session.

The risk-on sentiment was likely due to rallying oil prices, although market analysts also pointed to speculation that the ECB would be introducing even more stimulus during tomorrow’s monetary policy decision. Forex Gump has a write-up on that, if you’re interested. You can read it here.

Japan won’t cut further? – If y’all can still recall, Japan introduced negative rates during their January 29 monetary policy decision. And many forex traders are expecting even more easing measures, given the current state of the Japanese economy and the relatively strong yen.

Well, it looks like the BOJ is not going to cut rates any further in the upcoming March 15 decision, according to unnamed sources interviewed by Reuters. This is more of a rumor, if anything, but this report was likely the reason why the yen was the least weak most the safe-haven currencies. Heck, it was able to put up a good enough fight against the overwhelming might of the comdolls during the morning London session.

Major Currency Movers:

AUD – Another morning London session, another Aussie rally. This time, the Aussie rally was being fueled by the risk-on sentiment since iron was actually not doing too well during the session. Anyhow, the Aussie steamrolled most of its forex rivals, ending the morning London session as the one currency to rule them all.

AUD/USD was up by 51 pips (+0.69%) to 0.7486, AUD/JPY was up by 54 pips (+0.65%) to 84.16, AUD/CHF was up by 75 pips (+1.02%) to 0.7489

NZD – The Kiwi and the Loonie duked it out during the session and the Kiwi ultimately emerged triumphant, allowing it to claim the honor of being the second strongest currency during the session. It’s kinda strange, though, since Kiwi pairs usually lose volatility during the runup to the RBNZ decision. Or maybe forex traders are betting that the RBNZ to maintain rates and the preemptive positioning was boosting the Kiwi?

NZD/USD was up by 37 pips (+0.55%) to 0.6775, NZD/CHF was up by 62 pips (+0.92%) to 0.6779, NZD/CAD was up by 36 pips (+0.42%) to 0.9081

EUR – The risk-on sentiment sapped the lower-yielding euro of its strength, although it’s also possible that euro bulls were getting out ahead of the ECB’s rate decision tomorrow. The euro wasn’t the weakest currency during the session, however.

EUR/USD was down by 15 pips (-0.14%) to 1.0969, EUR/NZD was down by 118 pips (-0.73%) to 1.6184, EUR/AUD was down by 123 pips (-0.83%) to 1.4648

CHF – I already noted earlier that the Japanese yen was the least weak among the safe-havens. As for the weakest currency during the morning London session, that (dis)honor goes to the plunging Swissy. There weren’t any catalysts for the Swissy’s severe weakness, but it’s possible that the SNB is at it again, especially with the ECB decision looming ever closer.

USD/CHF was up by 32 pips (+0.33%) to 1.0002, EUR/CHF was up by 21 pips (+0.20%) to 1.0973, CAD/CHF was up by 36 pips (+0.50%) to 0.7463

Watch Out For:

  • 3:00 pm GMT: BOC overnight rate decision (unchanged at 0.50% expected)
  • 3:00 pm GMT: U.S. wholesales inventories (-0.2% expected, -0.1% previous)
  • 3:00 pm GMT: U.K. NIESR GDP estimate (0.4% previous)
  • 3:30 pm GMT: U.S. crude oil inventories (3.0M expected, 10.4M previous)
  • 8:00 pm GMT: RBNZ official cash rate decision and statement (unchanged at 2.50% expected)
  • 8:05 pm GMT: RBNZ press conference
  • 11:10 pm GMT: RBNZ Governor Graeme Wheeler will testify before the Finance and expenditure Select Committee

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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