London Session Forex Recap – Apr. 26, 2016

  • U.K. BBA mortgage approvals: 45.1K vs. 47.0K expected, 45.7K previous

Not much on the docket for today’s morning London forex session, but there was volatility aplenty as forex traders turned mainly to risk sentiment for direction.

Major Events/Reports:

Oil climbs higher – Oil benchmarks continued to climb higher during the course of the morning London session, with U.S. crude oil up by 1.38% to $43.23 per barrel and Brent crude oil up by 1.51% to $44.99 per barrel.

Market analysts pointed to the weaker dollar as the main catalyst for the oil rally since a weaker dollar make globally traded commodities like oil relatively cheaper.

Risk appetite returns – Signs of risk-taking in the European markets made a comeback during today’s morning London session, with the pan-European FTSEurofirst 300 up by 0.37% to 1,369.19 and the DAX up by 0.22% to 10,316.50 after dipping into the red earlier. The safe-haven gold also got kicked 0.48% lower to $1,234.20 per troy ounce during the session while U.S. equity futures were pushed modestly into the green, with the S&P 500 futures up by 0.22% to 2,087.75 and the Nasdaq futures up by 0.11% to 4,477.12 during the session.

Market analysts mainly attributed the risk-on sentiment during the session to better-than-expected earnings reports for European companies, although rallying oil prices likely caused risk sentiment to improve as well.

China announces plan to boost economy – China’s National Development and Reform Commission (NDRC) announced earlier during the session that it has a new guideline that’s meant to develop a “program of action on the promotion of consumer-driven transformation,” according to a Google-translated official press release.

This announcement was well-circulated by financial media outlets like Reuters and Nasdaq. And according to the details of the plan (in Chinese, no official English version yet), measures include improving the efficiency and lowering the costs of logistics, boosting car sales, promoting e-commerce in the rural areas, improving the sales channels between urban and rural areas, improving the quality of housing projects, and promoting the construction of parking lots, among others.

Major Currency Movers:

AUD – Aussie pairs jumped across the board shortly after the London morning session rolled in, and then traded mostly sideways (or moved at a grinding pace) for the rest of the session. The only catalyst at this time was the announcement of China’s plan to help boost its economy mainly by stoking consumption, which likely means more demand for Australian goods down the road.

AUD/USD was up by 27 pips (+0.36%) to 0.7726, AUD/JPY was up by 52 pips (+0.62%) to 85.80, AUD/NZD was up by 31 pips (+0.28%) to 1.1238

JPY – Risk appetite was the dominant sentiment during the session, so the safe-haven currencies were feeling a bit under the weather, especially when paired against the higher-yielders. The yen, however, was particularly weak, probably because of uncertainly on how the BOJ will act during the upcoming BOJ monetary policy.

USD/JPY was up by 31 pips (+0.28%) to 111.06, CHF/JPY was up by 37 pips (+0.33%) to 113.87, CAD/JPY was up by 41 pips (+0.48%) to 87.73

GBP – The pound continued to dominate its forex peers without any major catalysts, ending up as the one currency to rule them all during today’s morning London session.

GBP/USD was up by 52 pips (+0.37%) to 1.4544, GBP/JPY was up by 106 pips (+0.66%) to 161.56, GBP/NZD was up by 64 pips (+0.31%) to 2.1162

Watch Out For:

  • 1:30 pm GMT: Headline (1.9% expected, -2.8% previous) and core (0.5% expected, -1.0% previous) readings for U.S. durable goods orders
  • 1:55 pm GMT: BOC Governor Stephen Poloz will deliver a speech
  • 2:00 pm GMT: S&P Case-Shiller HPI (5.50% expected, 5.75% previous)
  • 2:45 pm GMT: Markit’s flash U.S. services PMI (52.3 expected, 51.3 previous)
  • 3:00 pm GMT: CB U.S. consumer confidence (95.6 expected, 96.2 previous)
  • 3:00 pm GMT: U.S. Richmond manufacturing index (11 expected, 22 previous)
  • 6:00 pm GMT: BOE Deputy Governor Jon Cunliffe has a speech

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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