London Session Forex Recap – May 11, 2016

  • U.K. industrial production m/m: 0.3% vs. 0.5% expected, -0.2% previous
  • U.K. industrial production y/y: -0.2% vs. -0.4% expected, 0.1% previous
  • U.K. manufacturing production m/m: 0.1% vs. 0.3% expected, -0.9% previous
  • U.K. manufacturing production y/y: -1.9% as expected vs. 1.6% previous

The forex calendar was a bit sparse during the morning London session, but there was price action aplenty since forex traders turned to rallying commodity prices for direction. Can you guess which currencies benefited the most?

Major Events/Reports:

Poor U.K. production numbersTotal industrial production in the U.K. increased by 0.3% month-on-month during the month of March, missing expectations of a 0.5% rise. On a year-on-year basis, however, industrial production fell by 0.2%, thanks to the 1.9% contraction in manufacturing output, which is the , which is the worst slump since July 2013.

The readings were disappointing enough, but they also probably made forex traders speculate that BOE officials are gonna be a bit more dovish during tomorrow’s MPC decision. By the way, if you’re interested on how the U.K. economy is doing overall, make sure to check out Forex Gump’s economic snapshot here.

Gloomy mood in European equities – Risk aversion was the dominant sentiment in European stock markets during the morning London session, with the pan-European FTSEurofirst 300 down by 0.73% to 1,311.52, the Euro Stoxx 50 down by 1.02% to 2,943.50, and the DAX down by 0.87% to 9,958.00 during the session.

U.S. equity futures were also flashing red, with the S&P 500 futures down by 0.20% to 2,073.25 and the Nasdaq futures likewise down by 0.20% to 4,383.12 near the end of the morning London session.

Market analysts attributed the risk-off sentiment to poor earnings reports for European companies.

Commodities soarCommodities were in full rally-mode during the morning London session, thanks to bargain-buying after the U.S. dollar dipped from a two-week high.

The precious metal gold was up by a solid 1.00% to $1,277.50 per troy ounce during the morning London session since it also probably got a boost from safe-haven flows, given the risk-off environment.

The base metal copper, meanwhile, was up by 1.41% to $2.122 per pound, since there was apparently renewed industrial demand for copper and other base metals, according to some market analysts.

Oil benchmarks, meanwhile, were in the green after an earlier dip due to expectations that more Canadian oil companies will restart operations after Canada’s oil-rich province of Alberta got ravaged by wildfires. U.S. crude oil was up by 0.38% to $44.83 per barrel while Brent crude oil was up by 0.99% to $45.97 per barrel near the end of the morning London session.

Major Currency Movers:

Comdolls – The comdolls (CAD,AUD, NZD) started the morning London session on a weak footing, probably because of the prevalence of risk aversion. They were able to recover very quickly, however, and then began dishing out the pain against their forex rivals.

The Loonie was the strongest among the comdolls, as well as the strongest currency during the morning London session, with the Aussie following closely in second place. As for the Kiwi, it’s performance wasn’t really anything to write home about, but at least it managed to edge out wins against the safe-havens by the end of the morning London session.

USD/CAD was down by 29 pips (-0.22%) to 1.2884 with 1.2941 as session high, CAD/JPY was up by 16 pips (+0.19%) to 84.36 with 83.91 as session low, CAD/CHF was up by 18 pips (+0.25%) to 0.7555 with 0.7523 as session low

AUD/USD was up by 11 pips (+0.16%) to 0.7364 with 0.7336 as session low, AUD/JPY was up by 16 pips (+0.20%) to 80.09 with 79.71 as session low, AUD/CHF was up by 20 pips (+0.29%) to 0.7174 with 0.7142 as session low

NZD/USD was up by 5 pips (+0.09%) to 0.6806 with 0.6780 as session low, NZD/JPY was up by 10 pips (+0.14%) to 74.02 with 73.67 as session low, NZD/CHF was up by 16 pips (+0.25%) to 0.6633 with 0.6601 as session low

GBP – The pound took a good pounding  across the board when the poor production numbers were released, and then spent the rest of the morning London session clawing its way back up. It had little luck against the comdolls, however, especially the Loonie and the Aussie.

GBP/USD was down by 6 pips (-0.04%) to 1.4441 with 1.4394 as session low, GBP/JPY was down by 8 pips (-0.05%) to 157.01 with 156.41 as session low, GBP/CHF was up by 5 pips (+0.04%) to 1.4063 with 1.4030 as session low

Watch Out For:

  • 2:00 pm GMT: NIESR U.K. GDP estimate (0.3% previous)
  • 2:30 pm GMT: U.S. crude oil inventories (0.1M expected, 2.8M previous)
  • 6:00 pm GMT: U.S. budget balance ($110B expected, -$108B previous)
  • 10:30 pm GMT: BNZ New Zealand manufacturing PMI (54.7 previous)
  • 10:45 pm GMT: New Zealand’s food price index (0.5% previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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