London Session Forex Recap – Mar. 16, 2016

  • U.K. jobless rate: unchanged at 5.1% as expected
  • U.K. claimant count change: -18.0K vs. -9.1K expected, -28.4K previous
  • U.K. average earnings: 2.1% vs. 2.0% expected, 1.9% previous
  • U.K. average earnings (no bonus): 2.2% vs. 2.1% expected, 2.0% previous
  • U.S. CPI readings coming up
  • FOMC statement and press conference later

Today’s morning London forex session was rather peaceful, as forex traders hunkered down ahead of U.S. inflation readings and the FOMC policy statement and press conference for later. Is this the calm before the storm?

Major Events:

U.K. jobs report – The United Kingdom’s jobs report for the three months to January 2016 was a pleasant surprise because the number of people claiming unemployment-related benefits got reduced by 18.0K, which is twice the expected reduction of 9.1K. The jobless rate also held steady at 5.1% while average earnings grew by 2.1%, which is a bit faster than both the expected increase of 2.0% and the previous 1.9% increase. It’s a healthy growth too since earnings still grew by 2.2% even if bonuses are stripped (2.1% expected, 2.0% previous).

The upbeat jobs report did not entice forex traders to load up on the pound, however, probably because of the upcoming U.S. CPI readings and FOMC statement.

Oil producers will meet in April – I reported back on Monday that unnamed sources being cited by Reuters were claiming that the planned March 20 oil freeze meeting in Russia will be moved to mid-April. Well, it looks like those unnamed sources were apparently reliable since Qatari Oil Minister Mohammed Bin Saleh Al-Sada announced earlier during the session that OPEC and non-OPEC oil producers will have a little huddle on April 17 over at Doha.

Market players were apparently pleased (for some reason) with this development since oil benchmarks began moving higher as reports about the announcement began to circulate, with U.S. crude oil up by 2.06% to $37.09 per barrel and Brent crude oil up by 1.70% to $39.40 per barrel during the morning London session.

Risk appetite retreats – There were modest signs of risk-taking at the start of the morning London session, which market analysts attributed to rising oil prices. However, the tide slowly turned as the session progressed, probably because market players didn’t want to be too exposed when the FOMC statement and presser finally roll around.

The FTSEurofirst 300 was down by 0.18% to 1,339.08 while the Euro Stoxx 50 was down by 0.24% to 3,061.00 during the morning London session. Both European equity indices were in the green earlier. The DAX was still up by 0.21% to 9,954.80, but it’s now off its intraday high around 10,020.00.

U.S. equity futures were also finally pushed into the red, with the S&P 500 futures down by 0.10% to 2,004.50 and Nasdaq futures down by 0.02% to 4,355.38. Gold was probably enjoying safe-haven demand, however, since it was up by 0.21% to $1,233.60 per troy ounce during the morning London session.

Pre-FOMC skittishness – Forex traders normally sit on their hands ahead of top-tier events like the upcoming FOMC statement, so volatility usually dries up and directional movement is hard to come by. And today was certainly a very normal day since most currency pairs were milling about in tight ranges.

Major Currency Movers:

AUD – Forex price action for all currencies was rather subdued during the morning London session, but the Aussie was clearly being influenced by risk sentiment since it broadly climbed higher at the start of the session when risk appetite dominated, but then began weakening when risk aversion began coming back.

AUD/USD was down by 4 pips (-0.05%) to 0.7448 with 0.7475 as session high, AUD/JPY was down by 13 pips (-0.15%) to 85.54 with 84.95 as session high, AUD/CHF was down by 8 pips (-0.11%) to 0.7359 with 0.7393 as session high

Watch Out For:

  • 1:30 pm GMT: Canadian manufacturing sales (0.5% expected, 1.2% previous)
  • 1:30 pm GMT: U.K. annual budget release
  • 1:30 pm GMT: U.S. housing starts (1.15M expected, 1.10M previous)
  • 1:30 pm GMT: U.S. building permits (1.20M expected, 1.20M previous)
  • 1:30 pm GMT: Headline (-0.2% expected, 0.0% previous) and core (0.2% expected,m 0.3% previous) readings for U.S. CPI
  • 2:15 pm GMT: U.S. industrial production (-0.3% expected, 0.9% previous)
  • 2:15 pm GMT: U.S. capacity utilization (76.9% expected, 77.1% previous)
  • 3:30 pm GMT: U.S. crude oil inventories (2.9M expected, 3.9M previous)
  • 7:00 pm GMT: FOMC federal funds rate decision and statement (unchanged at 0.5% expected)
  • 7:30 pm GMT: FOMC press conference
  • 10:45 pm GMT: New Zealand’s Q4 2015 GDP (0.7% expected, 0.9% previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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