London Session Forex Recap – Mar. 30, 2016

  • Swiss UBS consumption indicator: 1.53 vs. 1.45 previous
  • Swiss KOF leading indicator: 102.5 vs. 102.0 expected, 102.6 previous
  • Euro Zone consumer sentiment: unchanged at -9.7 as expected
  • Euro Zone business climate index: 0.11 vs. 0.08 expected, 0.09 previous
  • Euro Zone economic sentiment: 103.0 vs. 103.8 expected, 103.9 previous
  • Euro Zone industrial sentiment: -4.2 vs. -4.3 expected, -4.1 previous
  • German HICP m/m: 0.8% vs. 0.7% expected, 0.4% previous
  • German HICP y/y: 0.1% vs. 0.0% expected, -0.2% previous
  • ADP employment report on tap

Fed Head Yellen’s dovish tone from yesterday was being priced-in during today’s morning London forex session, resulting in a broad-based commodities rally and plenty of risk appetite that fueled demand for the higher-yielding currencies.

Major Events/Reports:

Commodities in rally mode – The Greenback got clobbered, thanks to Fed Head Yellen’s dovish tone during her speech yesterday, which contradicted her more hawkish peers. And market players quickly took advantage of the Greenback’s weakness. Commodities traders, in particular, decided to go on a shopping spree, pushing commodities broadly higher during the morning London session (and for the entire day for that matter.

Oil benchmarks were also in the green despite lingering concerns over the glut, with U.S. crude oil up by 1.62% to $38.90 per barrel and Brent crude oil up by 1.38% to $40.40 per barrel during the session. Heck, even the safe-haven gold was slightly up by 0.07% to $1,238.40 per troy ounce, even though risk appetite was pretty rampant during the morning London session.

Plenty of risk-taking – Risk-taking was the name of the game during today’s morning London session, with the pan-European FTSEurofirst 300 up by a healthy 1.46% to 1,342.73 and the DAX up by a solid 1.78% to 10,064.00 during the morning London session. U.S. equity futures were also glowing green, with the S&P 500 futures up by 0.56% to 2,059.00 and the Nasdaq futures up by 0.70% to 4,489.38 during the session.

The broad-based commodities rally that I mentioned earlier was probably driving risk appetite, given that mining companies were leading the way.

Rumors of more Japanese stimulus – A Bloomberg report that was citing the NHK came out earlier during the session. And the report, uh, reported that Japanese Prime Minister Shinzo Abe was thinking about introducing even more economic stimulus ahead of the summer elections. The rumored stimulus supposedly amounts to around ¥10 trillion ($89 billion), according to unnamed members of Abe’s Liberal Democratic Party.

Major Currency Movers:

Comdolls – The higher-yielding comdolls (NZD, CAD, AUD) were getting a dual boost from the prevailing risk-on sentiment and the broad-based commodities rally, with the Kiwi being the king of pips (or queen, if you like) among the three. There were no clear catalysts as to why the Kiwi was getting a heck of a lot more buyers that allowed it to trump its fellow comdolls, though.

AUD/USD was up by 31 pips (+0.41%) to 0.7671, AUD/CAD was up by 17 pips (+0.17%) to 0.9988, AUD/NZD was down by 39 pips (-0.35%) to 1.1071

NZD/USD was up by 52 pips (+0.76%) to 0.6926, NZD/JPY was up by 62 pips (+0.80%) to 77.83, NZD/CAD was up by 47 pips (+0.53%) to 0.9020

USD/CAD was down by 32 pips (-0.25%) to 1.3019, GBP/CAD was down by 41 pips (-0.22%) to 1.8776, CAD/JPY was up by 25 pips (+0.29%) to 86.29

JPY – The Greenback was still reeling from Fed Head Yellen’s dovish tone during today’s morning London session, but the Greenback wasn’t the weakest currency of them all. That (dis)honor goes to the Japanese yen. Interestingly enough, the safe-haven yen was actually winning out against the Greenback while putting up a fight against its other forex rivals. That all ended and the yen began to weaken across the board when the rumors about further stimulus that I mentioned earlier began to circulate.

USD/JPY was up by 9 pips (+0.09%) to 112.39, AUD/JPY was up by 38 pips (+0.45%) to 86.20, GBP/JPY was up by 11 pips (+0.07%) to 162.04

Watch Out For:

  • 1:15 pm GMT: U.S. ADP employment survey (198K expected, 214K previous)
  • 3:30 pm GMT: U.S. crude oil inventories (3.1M expected, 9.4M previous)
  • 7:35 pm GMT: BOC Deputy Governor Lynn Patterson will deliver a speech

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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