London Session Forex Recap – July 15, 2016

  • Italian trade balance: €5.03B vs. €3.27B expected, €4.51B previous
  • U.K. construction output m/m: -2.1% vs. -1.2% expected, 2.5% previous
  • Euro Zone trade balance: €24.5B vs. €25.0B expected, €25.4B previous
  • Euro Zone final HICP y/y: 0.1% as expected
  • Euro Zone final core HICP y/y: unchanged at 0.9% as expected
  • U.S. retail sales and CPI data coming up

We were treated to another choppy morning London session, but the Aussie and the Loonie were clearly in demand during the session, since the two currencies were appreciating against their forex rivals.

Major Events/Reports:

BOE Haldane speaksThe text of BOE Chief Economist Andrew Haldane’s speech, which was based on an earlier statement, was released today, and it showed that in Haldane’s personal view, “a material easing of monetary policy is likely to be needed, as one part of a collective policy response aimed at helping protect the economy and jobs from a downturn.”

Unfortunately and just like the yesterday’s BOE MPC meeting minutes, the size and nature of the easing measure(s) was not revealed, which is a real bummer. Haldane did stress that this monetary response must be “delivered promptly as well as muscularly” in order to “buttress expectations and confidence.” As to how Haldane defined “promptly“, he explicitly said “next month,” which is the general sentiment shared by the MPC members.

Risk aversion finally returns – After almost a week of risk-taking, risk aversion finally made a comeback during Friday’s morning London session, with the pan-European FTSEurofirst 300 down by 0.48% to 1,331.28, the blue-chip Euro Stoxx 50 down by 0.66% to 2,948.50, the U.K.’s FTSE 100 down by 0.26% to 6,637.00, and the DAX down by 0.39% to 10,029.00.

U.S. equity futures were also dipping into negative territory, with the S&P 500 futures index down by 0.03% to 2,157.00 and the Nasdaq futures index down by 0.01% to 4,589.88, while the safe-haven gold was up slightly by 0.08% to 1,333.25 per troy ounce.

Market analysts pointed out that travel companies were getting slammed hard and dragging European equities lower, so the earlier probable terror attack that struck Nice, France still seems to be weighing down on risk sentiment. But given the four-day global rally, it’s also possible that we’re just seeing some end-of-week profit-taking.

Oil suddenly recovers – Oil benchmarks were in the red for most of the morning London session, but they suddenly made a U-turn near the end to end up in positive territory, with U.S. crude oil up by 0.28% to $45.81 per barrel and Brent blend crude oil up by 0.23% to $47.48 per barrel. Market analysts couldn’t pinpoint the exact reason for the sudden surge in demand.

Major Currency Movers:

AUD – Most Aussie pairs pairs were in the green during the morning London territory, although most Aussie pairs are actually trading sideways when you also consider price action from the earlier Asian session.

There was no clear catalyst for the broad-based Aussie demand and the higher-yielding Aussie even shrugged off the risk-off move. It’s possible, however, that European forex traders were pricing-in the mostly upbeat Chinese economic data from earlier, given Australia’s close trade relations with China.

AUD/USD was up by 22 pips (+0.29%) to 0.7653, AUD/JPY was up by 32 pips (+0.40%) to 80.91, AUD/CHF was up by 13 pips (+0.18%) to 0.7496

CAD – The Loonie had a mixed performance for most of the session, but got boosted by buyers near the the end, probably because of the sudden recovery in oil prices.

USD/CAD was down by 38 pips (-0.30%) to 1.2869, EUR/CAD was down by 47 pips (-0.33%) to 1.4312, GBP/CAD was down by 81 pips (-0.47%) to 1.7206

Watch Out For:

  • 12:30 pm GMT: Headline (0.1% expected, 0.5% previous) and core (0.4% expected, 0.4% previous) readings for U.S. retail sales
  • 12:30 pm GMT: U.S. Empire State survey (5.00 expected, 6.01 previous)
  • 12:30 pm GMT: Headline (0.2% expected, 0.2% previous) and core (0.2% expected, 0.2% previous) readings for U.S. CPI
  • 1:15 pm GMT: U.S. capacity utilization (75.1% expected, 74.9% previous)
  • 1:15 pm GMT: U.S. industrial production (0.3% expected, -0.4% previous)
  • 2:00 pm GMT: U.S. business inventories (0.1% expected, 0.1% previous)
  • 2:00 pm GMT: University of Michigan final U.S. consumer sentiment (downgrade to 93.3 from 93.5 expected)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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