London Session Forex Recap – June 14, 2016

  • Swiss PPI m/m: 0.4% vs. 0.1% expected, 0.3% previous
  • U.K. CPI m/m: 0.2% vs. 0.3% expected, 0.1% previous
  • U.K. CPI y/y: 0.3% vs. 0.4% expected, 0.3% previous
  • U.K. core CPI y/y: 1.2% vs. 1.3% expected, 1.2% previous
  • U.K. ONS HPI y/y: 8.2% vs. 9.0% previous
  • Euro Zone employment change q/q: 0.3% vs. 0.2% expected, 0.3% previous
  • Euro Zone industrial production m/m: 1.1% vs. 0.8% expected, -0.7% previous
  • Euro Zone industrial production y/y: 2.0% vs. 1.4% expected, 0.2% previous
  • U.S. NFIB Small Business Index: 93.8 as expected vs. 93.6 previous

Plunging commodities and another round of risk aversion during the morning London session meant that commodities got slapped silly while the safe-haven currencies got a boost.

Major Events/Reports:

Steady U.K. inflation – The headline and core readings for annual U.K. CPI both held steady at 0.3% and 1.2% respectively, missing expectations that they would both tick higher. But on a more upbeat note, the headline reading increased by 0.2% month-on-month, which is better than last month’s 0.1% increase. It missed the expected increase of 0.3%, however.

Commodities carnage – Almost all commodities were bleeding out during the morning London session, with the precious metal gold down by 0.18% to $1,284.55 per troy ounce while the base metal copper was down by 0.75% to $2.038 per pound. As for oil benchmarks, U.S. crude oil was down by 1.21% to $48.29 per barrel while Brent crude oil was down by 1.23% to $49.73 per barrel.

Market analysts blamed the lack of appetite for commodities to a stronger U.S. dollar due to safe-haven flows, which made commodities more expensive and less attractive.

Yet another risk-off session – It looks like risk aversion won’t be leaving the European markets soon since European equity indices were down for the fifth session now, with the the pan-European FTSEurofirst 300 down by 1.25% to 1,268.33, the blue-chip Euro Stoxx 50 down by 1.53% to 2,818.50, the U.K. FTSE 100 down by 1.17% to 5,974.00, and the DAX down by 0.75% to 9,585.00 by the end of the session.

U.S. equity futures were also signalling another downbeat day for the U.S. session, with the S&P 500 futures index down by 0.30% to 2,063.50 and the Nasdaq futures index down by 0.31% to 4,405.12.

Market analysts were attributing the persistent risk aversion to jitters ahead of the next week’s Brexit referendum, given that the most recent polls continue to favor the “leave” camp.

Major Currency Movers:

Comdolls – The higher-yielding comdolls (NZD, CAD, AUD) couldn’t bear the crushing weight of selling pressure brought about by sinking commodity prices and another round of risk aversion. Among the comdolls, the Aussie was particularly vulnerable, so much so that it ended up as the weakest currency of the session.

There were no apparent catalysts for the Aussie’s weakness, however, other than reports that Australia’s S&P/ASX 200 slumped hard by 2.06% to 5203.3 on higher-than-average volume, which erased roughly $30 billion in shareholder value.

AUD/USD was down by 50 pips (-0.68%) to 0.7346, AUD/JPY was down by 38 pips (-0.49%) to 77.83

NZD/USD was down by 35 pips (+0.50%) to 0.7004, NZD/CHF was down by 31 pips (-0.48%) to 0.6758

GBP/CAD was up by 20 pips (+0.11%) to 1.8177, CAD/CHF was down by 17 pips (-0.24%) to 0.7501

USD – All the safe-haven currencies (USD, JPY, CHF) were enjoying risk-off flows during the morning London session, at the expense of the higher-yielding comdolls, of course. However, the Greenback emerged as the ultimate victor (during this session at least) since it was able to trump its fellow safe-havens.

USD/JPY was up by 18 pips (+0.17%) to 105.94, USD/CHF was up by 4 pips (+0.04%) to 0.9649, USD/CAD was up by 31 pips (+0.24%) to 1.2859

GBP – The pound was actually getting a bullish boost during most of the morning London session. It may have been due to the steady CPI reading, but it was more likely due to profit-taking after falling to 8-week lows against the U.S. dollar, since pound pairs finally found fresh sellers near the end of the session.

GBP/USD was down by 22 pips (-0.16%) to 1.4131, GBP/AUD was up by 101 pips (+0.53%) to 1.9327, GBP/NZD was up by 71 pips (+0.35%) to 2.0171

Watch Out For:

  • 12:30 pm GMT: U.S. import prices (0.7% expected, 0.3% previous)
  • 12:30 pm GMT: Headline (0.3% expected, 1.3% previous) and core (0.4% expected, 0.8% previous) readings for U.S. retail sales
  • 12:30 pm GMT: U.S. business inventories (0.2% expected, 0.4% previous)
  • 10:45 pm GMT: New Zealand’s current account (-$0.98B expected, -$2.61B previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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