London Session Forex Recap – Mar. 14, 2016

  • Euro Zone industrial production m/m: 2.1% vs. 1.7% expected, -0.5% previous
  • Euro Zone industrial production y/y: 2.8% vs. 1.6% expected, -0.1% previous

Not much on the docket, but today’s morning London session was rather lively, as forex traders turned mainly to risk appetite for direction. Although monetary policy divergence seems to have been in play as well.

Major Events:

Oil sinks – Oil benchmarks were in full retreat during the morning London session, on reports that Iran will not join the oil freeze deal until and unless it reaches production of 4 million barrels a day. There were also reports that the highly anticipated March 20 oil freeze meeting in Russia will be postponed until mid-April, according to three unnamed OPEC sources being cited by Reuters.

U.S. crude oil was down by 2.96% to $37.36 per barrel during the morning London session while Brent crude oil was down by 2.95% to $39.20 per barrel.

Mostly risk-on session – Appetite for risk was the main theme for Monday’s morning London session, with the pan-European FTSEurofirst 300 up by 0.76% to 1,357.72 while the DAX was up by a very respectable 1.55% to 9,983.50.

Market analysts noted that banks were leading the European equities rally, so perhaps the ECB’s monetary policy decision from last week may be in play, especially the targeted longer-term refinancing operations (TLTRO) since that will benefit banks the most.

Gold, the traditional safe-haven, was also down by 0.24% to $1,256.40 per troy ounce, but U.S. equity futures were not in a joyful mood, with the S&P 500 futures slightly down by 0.17% to 2,007.00 and Nasdaq futures down by 0.15% to 4,338.00 during the morning London session.

Major Currency Movers:

EUR – The prevalence of risk appetite during the morning London session placed selling pressure on the lower-yielding euro as European market players scrambled for riskier assets, namely European equities. And given that banks were leading the European equities rally, it’s also possible that market is also considering the longer-term consequences of the ECB’s most recent monetary policy decision.

EUR/USD was down by 41 pips (-0.37%) to 1.1109, EUR/AUD was down by 51 pips (-0.34%) to 1.4744, EUR/GBP was down by 21 pips (-0.28%) to 0.7742

CHF – The euro wasn’t the only victim of the risk-on sentiment during the session since the safe-haven currencies were also on the defensive. The Swissy stood out the most, however, since it was the weakest among the safe-havens.

USD/CHF was up by 32 pips (+0.33%) to 0.9874, AUD/CHF was up by 22 pips (+0.30%) to 0.7440, CAD/CHF was up by 25 pips (+0.34%) to 0.7449

NZD – The euro and the Swissy weren’t the weakest currencies during the session. That (dis)honor goes to the Kiwi. There weren’t any catalysts for the Kiwi’s weakness, but it’s possible that market players are reminiscing on the RBNZ’s policy decision from last week.

NZD/USD was down by 26 pips (-0.40%) to 0.6698, NZD/JPY was down by 39 pips (-0.51%) to 76.16, NZD/CHF was down by 6 pips (-0.10%) to 0.6613

CAD – If the Kiwi was the weakest currency during the session, then the Loonie was the strongest, even though oil was getting crushed during the session. Aside from the risk-on environment, there weren’t any major catalysts for the Loonie, so perhaps monetary policy divergence was in play here, given the BOC’s rather upbeat outlook.

USD/CAD was down by 20 pips (-0.16%) to 1.3245, EUR/CAD was down by 61 pips (-0.43%) to 1.4719, NZD/CAD was down by 38 pips (-0.42%) to 0.8877

Watch Out For:

  • 8:00 pm GMT: RBNZ Governor Graeme Wheeler will deliver a speech

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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