London Session Forex Recap – June 15, 2016

  • French HICP m/m: 0.5% vs. 0.3% expected, 0.3% previous
  • French HICP y/y: 0.1% vs. 0.0% expected, 0.0% previous
  • U.K. claimaint count change: -0.4K vs. -0.1K expected, 6.4K previous
  • U.K. jobless rate: 5.0% vs. steady at 5.1% expected
  • U.K. average earnings: 2.0% vs. 1.7% expected, 2.0% previous
  • U.K. average earnings (no bonus): 2.3% vs. 2.1% expected, 2.2% previous
  • Euro Zone trade balance: €28.0B vs. €21.5B expected, €23.7B previous
  • FOMC statement and presser for later

Volatility was relative subdued and price action was a bit choppy during today’s morning London session, probably because forex traders were hunkering down ahead of the FOMC statement and presser for later. That doesn’t mean there were no movers at all, however.

Major Events/Reports:

Upbeat U.K. jobs report – The jobless rate fell to 5.0% in the three months to April, which is great since that’s better than the consensus that it would hold steady at 5.1%, and it’s lowest reading in over ten years to boot. The number of people claiming unemployment-related benefits also decreased by 0.4K, which is more than the expected decrease of 0.1K. Furthermore, total earning increased by 2.0% year-on-year in the three months to April, beating expectations of a 1.7% increase and matching the previous reporting period’s pace of growth. Stripped of bonuses, earning actually accelerated a bit growing by 2.3%, which is a tick higher than the previous period’s 2.2% increase.

Base metals soar – Commodities had a mixed performance during the morning London session, but base metals were soaring to the high heavens like eagles whose tails are on fire. Copper was up by an awesome 2.67% to $2.095 per pound, zinc was up by a very solid 1.44% to $137.35 per kilogram, and tin was up by a respectable 1.24% to $17,082.50 per metric ton.

Some market analysts attributed this to the softer U.S. dollar, but I don’t think that’s the likely reason since the Greenback’s performance is actually kinda mixed and other commodities weren’t doing too well. I think the likely reason is speculation due to earlier reports that China is planning to increase its stockpiles of base metals as one of its reform measures.

Oil clobbered – Base metals may be having a good time, but oil benchmarks got the stuffing beaten out of ’em during the morning London session, with U.S. crude oil down by 0.82% to $48.09 per barrel and Brent crude oil down by 1.22% to $49.22 per barrel by the end of the session.

Market analysts pretty much blamed the slide in oil prices to lingering Brexit jitters and oversupply concerns after U.S. oil inventories saw a buildup instead of the expected decrease.

Risk-taking aplenty – Risk aversion finally went away during today’s morning London session, with the pan-European FTSEurofirst 300 up by 1.24% to 1,275.79, the blue-chip Euro Stoxx 50 up by 1.40% to 2,835.00, the U.K. FTSE 100 up by 0.94% to 5,979.00, and the DAX up by 1.04% to 9,618.00 by the end of the session.

U.S. equity futures were also in the green, with the S&P 500 futures index up by 0.19% to 2,070.00 and the Nasdaq futures index up by 0.21% to 4,427.25. The safe-haven gold, meanwhile, was down by 0.34% to $1,283.75 per troy ounce.

Market analysts noted that mining companies were the main winners, so it’s probably safe to say that the risk-friendly environment was due to the base metals rally that I mentioned earlier.

Pre-FOMC battle stations – Forex traders normally hunker down ahead of top-tier events like the upcoming FOMC statement and presser, which results in subdued volatility and/or limited directional movement. Forex Gump has a nifty write-up for ya, if you’re planning to trade the FOMC statement. You can read it here.

Major Currency Movers:

AUD – Surging base metals and the overall risk-friendly environment enticed some forex traders to load up on the higher-yielding comdolls, with the Aussie apparently getting the most love from forex traders.

AUD/USD was up by 11 pips (+0.15%) to 0.7392, AUD/CAD was up by 13 pips (+0.14%) to 0.9484, AUD/NZD was up by 11 pips (+0.10%) to 1.0510

GBP – The Aussie wasn’t the best performing currency during the morning London session since that honor goes to the pound. The pound actually started the session on a strong footing, likely due to profit-taking ahead of the FOMC statement. Pound pairs then got a bullish boost after the U.K. jobs report was released.

GBP/USD was up by 30 pips (+0.22%) to 1.4191, GBP/JPY was up by 24 pips (+0.16%) to 150.74, GBP/NZD was up by 30 pips (+0.21%) to 1.4191

Watch Out For:

  • 12:30 pm GMT: Headline (0.3% expected, 0.2% previous) and core (0.1% expected, same as previous) readings for U.S. PPI
  • 12:30 pm GMT: U.S. Empire State survey (-4.25 expected, -9.02 previous)
  • 12:30 pm GMT: Canadian manufacturing sales (0.6% expected, -0.9% previous)
  • 1:15 pm GMT: U.S. industrial production (-0.2% expected, 0.7% previous)
  • 1:15 pm GMT: U.S. capacity utilization (75.2% expected, 75.4% previous)
  • 2:30 pm GMT: U.S. crude oil inventories (-3.2M previous)
  • 6:00 pm GMT: FOMC rate decision and statement (steady at 0.5% expected)
  • 6:30 pm GMT: FOMC press conference
  • 10:45 pm GMT: New Zealand’s Q1 GDP (0.5% expected, 0.9% previous)
  • Dairy auction currently underway (2.6% previous); auction usually ends at around 2:00 pm GMT

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical weeks!