London Session Forex Recap – Mar. 29, 2016

  • Euro Zone M3 money supply y/y: 5.0% as expected, same as previous
  • Euro Zone Private loans y/y: 1.6% vs. 1.4% expected and previous
  • Fed Chairperson Janet Yellen will be speaking later

Forex price action during today’s morning London session was a bit wonky, as European market players came back to play after yesterday’s Easter Monday holiday and before Fed Head Yellen’s speech for later.

Major Events/Reports:

Commodities retreat – Commodities were broadly in the red during today’s morning London session, with the base metal copper down by 1.47% to $2.213 per pound and the precious metal gold down by 0.17% to $1,219.90 per troy ounce.

Oil benchmarks were also bleeding out, with U.S. crude oil down by 2.03% to $38.59 per barrel and Brent blend crude down by 2.35% to $39.91 per barrel during the morning London session. Iron ore with 62% content was also down by 0.55% to $49.68 per dry metric ton during the session.

The broad-based commodities retreat was likely due to the Greenback’s recent bouts of strength, which made globally-traded commodities relatively more expensive, as well as expectations that China’s official manufacturing PMI reading will come in at 49.3 (49.0 previous), according to economists polled by Reuters earlier. If that does happen, then that will mark the eighth consecutive month that China’s manufacturing sector has contracted, which may mean lower demand for commodities. Incidentally, that’s what other market analysts think so too.

The BOE’s FPC statement – The Bank of England (BOE) released its Financial Policy Committee (FPC) statement during the morning London session, and it was a bit downbeat overall since “the FPC judges that the outlook for financial stability in the United Kingdom has deteriorated since it last met in November 2015.”

Some of the risk that the FPC identified last year have also “crystallised” while “risks stemming from the global environment have increased.” The FPC also identified the possibility of a Brexit as the main domestic risk, and the uncertainty that the possibility of a Brexit brings may continue to weigh down on the pound and limit investment.

Still, the FPC judges that ” measures of bank resilience have improved since November 2015,” but “investors expect weaker future profitability.”

Major Currency Movers:

AUD – The Aussie was the weakest currency during the morning London forex session. This was probably due to the worries over China and slumping commodities, namely iron ore.

AUD/USD was down by 22 pips (-0.30%) to 0.7519, AUD/CAD was down by 60 pips (-0.61%) to 0.9898, AUD/NZD was down by 47 pips (-0.42%) to 1.1138

GBP – The pound just kept climbing across the board during today’s morning London session. It paused and retreated a bit when the rather downbeat FPC statement came out, but it quickly recovered and began climbing even higher. There were no apparent catalysts for the pound’s strength, however, which is one of the reasons why I said forex price action during today’s morning London session was a bit wonky.

GBP/USD was up by 60 pips (+0.43%) to 1.4288, GBP/CHF was up by 76 pips (+0.55%) to 1.3930, GBP/AUD was up by 133 pips (+0.71%) to 1.8995

CAD – The Loonie was the second strongest currency after the pound during today’s morning London session, which is rather weird because oil benchmarks got slammed today. There are Canadian economic reports lined up for later, but they’re mid-tier reports at best, so I don’t think the Loonie’s strength was due to preemptive positioning.

USD/CAD was down by 43 pips (-0.34%) to 1.3159, AUD/CAD was down by 40 pips (-0.28%) to 1.4740, NZD/CAD was down by 19 pips (-0.21%) to 0.8884

NZD – Forex price action for the pound and the Loonie were a bit wonky, but the Kiwi’s price action takes the cake (and eats it too). The Kiwi was pretty weak at the start of the session, but got a burst of bullish strength about halfway through the session, even though there weren’t any catalysts. Some market analysts were attributing this to technicals, however.

NZD/USD was up by 9 pips (+0.14%) to 0.6751 with 0.6728 as session low, NZD/JPY was up by 7 pips (+0.10%) to 76.69 with 76.39 as session low, NZD/CHF was up by 14 pips (+0.23%) to 0.6580 with 0.6567 as session low

Watch Out For:

  • 1:30 pm GMT: Canadian IPPI (-0.2% expected, 0.5% previous)
  • 1:30 pm GMT: Canadian RMPI (-0.9% expected, -0.4% previous)
  • 2:00 pm GMT: U.S. S&P Case-Shiller HPI (5.70% expected, 5.74% previous)
  • 3:00 pm GMT: U.S. CB consumer confidence (94.0 expected, 92.2 previous)
  • 5:20 pm GMT: Fed Chairperson Janet Yellen is scheduled to speak
  • 10:45 pm GMT: New Zealand’s building permits (-8.2% previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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