London Session Forex Recap – Apr. 15, 2016

  • U.K. construction output m/m: -0.3% vs. 0.0% expected, -0.4% previous
  • U.K. construction output y/y: 0.0% vs. 0.7% expected, -0.8% previous
  • Euro Zone trade balance: €20.2B vs. €21.5 expected, €22.8B previous

Risk aversion prevailed during the morning London forex session, so the lower-yielding currencies went forth to do battle against the higher-yielders, with the safe-haven yen emerging as this session’s champion.

Major Events/Reports:

Oil kicked lower – Oil benchmarks were bleeding out during Friday’s morning London session, with U.S. crude oil down by 2.19% to $40.59 per barrel and Brent crude oil down by 0.96% to $42.88 per barrel.

Market analysts attributed oil’s poor performance to speculation that oil producers will not be able to hammer out a deal in this Sunday’s oil freeze meeting.

Risk aversion domination – There was a very noticeable lack of risk-taking during the morning London session since European equity indices were broadly in the red, with the pan-European FTSEurofirst 300 down by 0.42% to 1,348.24 and the DAX down by 0.64% to 10,029.00.

U.S. equity futures were also in negative territory, with the S&P 500 futures down by 0.19% to 2,072.50 and the Nasdaq futures down by 0.23% to 4,535.75 during the morning London session. Meanwhile, the safe-haven gold was enjoying the risk-off vibes, however, since it was up by 0.44% to $1,231.90 per troy ounce during the session.

Market analysts pointed mainly to poor earnings, but it’s possible that market players are just taking profits off the table to avoid weekend risk.

Major Currency Movers:

JPY – The prevailing risk-off sentiment favored the safe-haven yen, allowing it to easily trump its forex rivals, including its fellow safe-havens (USD and CHF).

USD/JPY was down by 46 pips (-0.42%) to 108.87, CHF/JPY was down by 51 pips (-0.45%) to 112.49, CAD/JPY was down by 72 pips (-0.85%) to 84.67

EUR – The risk-off environment also allowed the lower-yielding euro to emerge as the second strongest currency during the session, even though the euro zone’s trade surplus didn’t quite meet expectations.

EUR/USD was up by 25 pips (+0.22%) to 1.1282, EUR/CAD was up by 89 pips (+0.62%) to 1.4502, EUR/CHF was up by 23 pips (+0.22%) to 1.0918

CAD – All of the higher-yielding comdolls (AUD, CAD, NZD) were feeling some bearish pressure during the morning London session, but the Loonie ended up being the weakest currency of them all because it got a double roundhouse kick from the slide in oil prices and the rampant risk aversion.

USD/CAD was up by 55 pips (+0.41%) to 1.2855, CAD/JPY was down by 72 pips (-0.84%) to 84.67, CAD/CHF was down by 31 pips (-0.41%) to 0.7524

Watch Out For:

  • 1:30 pm GMT: Canadian manufacturing sales (-1.5% expected, 2.3% previous)
  • 1:30 pm GMT: U.S. Empire State survey (2.00 expected vs. 0.62 previous)
  • 2:15 pm GMT: U.S. capacity utilization (75.3% expected, 76.7% previous)
  • 2:15 pm GMT: U.S. industrial production (-0.1% expected, -0.5% previous)
  • 3:00 pm GMT: University of Michigan preliminary consumer sentiment (92.0 expected, 91.0 previous)
  • 3:00 pm GMT: University of Michigan preliminary inflation expectations (2.7% previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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