London Session Forex Recap – July 26 2016

  • Spanish PPI y/y: -4.7% vs. -5.6% previous
  • U.K. BBA mortgage approvals: 40.1K vs. 40.2K expected, 41.8K previous

Price action was rather wonky during today’s morning London session, with the Swissy and the Kiwi on the move, even though there were no catalysts, and the pound moving broadly higher on bad data.

Major Events/Reports:

BBA mortgage approvals decline – The number of mortgages approved by the British Bankers’ Association (BBA) fell from 41,842 to 40,103 in June, lower than the expected 40,200 figure and the weakest reading since March 2015. This is not good news since it means that housing market activity in the U.K. continues to cool down.

Oil sinks lower – Today’s morning London session was another down day for oil benchmarks, with U.S. crude oil down by 1.16% to $42.63 per barrel and Brent Crude oil down by 0.86% to $44.74 per barrel. Both oil benchmarks are at multi-month lows.

Like yesterday (and most of last week for that matter), market analysts pointed to oversupply jitters over the increase in the number of U.S. oil rigs and high oil output from OPEC members while demand remains subdued.

Modest appetite for risk – Signs of risk-taking persisted in Europe today, with the pan-European FTSEurofirst 300 barely up by 0.07% to 1,345.87, the blue-chip Euro Stoxx 50 up by 0.26% to 2,976.00, the U.K.’s FTSE 100 up by 0.22% to 6,725.00, and the DAX up by 0.31% to 10,230.00 during the morning London session. Many of the major European equity indices were in the red earlier.

The safe-haven gold, meanwhile, was down by 0.03% to $1,326.90 per troy ounce. As for U.S. equity futures, they were mixed, with the S&P 500 futures index down by 0.02% to 2,161.75 while the Nasdaq futures index was up by 0.17% to 4,661.62.

Market analysts couldn’t really pinpoint the reason for the shift in sentiment during the course of the session, although they blamed the earlier dip to the poor performance of banking shares, as well as the slide in oil prices.

Major Currency Movers:

CHF – The Swissy got pummeled during the session, even though there was no catalyst other than the moderate risk-taking. It’s possible that the SNB is up to old tricks in trying to weaken the Swissy again, however.

USD/CHF was up by 33 pips (+0.34%) to 0.9889, EUR/CHF was up by 26 pips (+0.24%) to 1.0874, AUD/CHF was up by 35 pips (+0.48%) to 0.7442

NZD – The Kiwi and the Aussie extended their gains from the earlier Asian session, but the Kiwi was clearly outpacing the Aussie. As to what was driving the two higher (other than risk sentiment), particularly the Kiwi, nobody really knows for sure. It’s possible that European forex traders were pricing-in New Zealand’s positive trade data from earlier, though. Others say algos were the reason for the earlier spikes on the Aussie and Kiwi.

NZD/USD was up by 27 pips (+0.39%) to 0.7062, NZD/CAD was up by 54 pips (+0.59%) to 0.9351, NZD/CHF was up by 49 pips (+0.71%) to 0.6984

GBP – Despite the poor reading for BBA’s mortgage approvals, the pound just kept on climbing higher during the morning London session, barely losing out only to the Kiwi to end up as the second-strongest currency of the session.

GBP/USD was up by 58 pips (+0.37%) to 1.3127, GBP/CAD was up by 95 pips (+0.54%) to 1.7377, GBP/CHF was up by 90 pips (+0.70%) to 1.2981

CAD – The Loonie’s price action was the only one that made sense. Another slide in oil prices = another round of broad-based weakness for the Loonie.

USD/CAD was up by 25 pips (+0.19%) to 1.3238, EUR/CAD was up by 13 pips (+0.10%) to 1.4559, AUD/CAD was up by 30 pips (+0.31%) to 0.9962

Watch Out For:

  • 1:00 pm GMT: S&P Case-Shiller U.S. HPI (5.52% expected, 5.44% previous)
  • 1:45 pm GMT: Markit’s flash services PMI (51.2 expected, 51.4 previous)
  • 2:00 pm GMT: U.S. new home sales (560K expected, 551K previous)
  • 2:00 pm GMT: U.S. CB consumer confidence (96.0 expected, 98.0 previous)
  • 2:00 pm GMT: Richmond manufacturing index (-4 expected, -7 previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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