London Session Forex Recap – August 15, 2016

  • Bank holiday in Italy and France today
  • Swiss PPI m/m: -0.1% vs. -0.2% expected, 0.1% previous
  • Swiss PPI y/y: -0.8% vs. -0.9% expected, -1.0% previous

The forex calendar was almost empty and some of the major European markets were closed for a holiday (and it’s Monday to boot), so price action was relatively tight during today’s morning London session. Pound pairs were moving lower, though.

Major Events/Reports:

SNB sight deposits fall – The sight deposits of domestic Swiss banks fell from CHF 437,319 million to CHF 434,742 million for the week ending on August 12. 2016. This may mean that the SNB was not actively weakening the Swissy last week.

British PM May is determinedAccording to a spokesman for new British PM Theresa May, the PM will put the “full weight of the machinery of government” into getting the best deal possible when negotiations for an actual Brexit begin.

That didn’t stop the pound’s slide, however, likely because the spokesman also said that “Article 50 notification won’t happen before the end of 2016,” which means that uncertainty will likely abound until then.

Most commodities continue to rise – The broad-based rise commodity prices that started during the earlier Asian session persisted into the morning London session.

Precious metals were supported:

  • Gold was up by 0.11% to $1,344.65 per troy ounce
  • Silver was up by 0.72% to $19.845 per troy ounce

Base metals were also getting some buyers:

  • Copper was up by 0.14% to $2.143 per pound
  • Nickel was up by 0.22% to $10,315.00 per dry metric ton
  • Aluminum was up by 0.36% to $1,656.25 per kilogram

Oil benchmarks were also in positive territory after dipping into the red earlier:

  • U.S. WTI crude oil was up by 0.20% to $44.58 per barrel
  • Brent blend crude oil was up by 0.19% to $47.06 per barrel

The broad-based rise in commodity prices was likely due to the Greenback’s relative weakness, which made commodities cheaper and more attractive for market players holding currencies other than the Greenback.

A little risk-taking to start the week – It’s a new week and European market players apparently had their optimism goggles on, since most of the major European equity indices were in the green.

  • The pan-European FTSEurofirst 300 was up by 0.14% to 1,364.79
  • The blue-chip Euro Stoxx 50 was up by 0.24% to 3,054.00
  • The U.K.’s FTSE 100 was up by 0.31% to 6,937.20
  • The DAX was up by 0.39% to 10,755.00

U.S. equity futures were also in the green so, chances are good that the risk-on vibes may carry over into the upcoming U.S. session.

  • The S&P 500 futures index was up by 0.18% to 2,184.25
  • The Nasdaq futures index was up by 0.20% to 4,813.62

Market analysts are attributing the appetite for risk to good news for several pharmaceutical companies, as well as the commodities rally and the search for higher yield now that yield from bonds and cash are at very low levels due to easing by the major central banks.

Major Currency Movers:

GBP – The statement from the British PM’s spokesman didn’t give the pound a bullish boost. Maybe it even helped push the pound lower because of the spokesman’s additional clause that actual negotiations “won’t happen before the end of 2016″.

Other than that, there wasn’t really any major catalyst for the pound, so the pound’s weakness was likely an extension of last week’s theme, namely Brexit-related outflows and reinforced BOE rate cut expectations.

GBP/USD was down by 38 pips (-0.29%) to 1.2895, GBP/JPY was down by 64 pips (-0.49%) to 130.16, GBP/NZD was down by 107 pips (-0.60%) to 1.7874

NZD – While the Kiwi’s price action was not as clear-cut as that of the pound’s, the Kiwi still managed to end the session on a high note, likely because of the prevalence of risk appetite.

NZD/USD was up by 21 pips (+0.29%) to 0.7212, NZD/CAD was up by 16 pips (+0.17%) to 0.9327, NZD/CHF was up by 12 pips (+0.17%) to 0.7022

Watch Out For:

  • 12:30 pm GMT: U.S. Empire State survey (2.00 expected, 0.55 previous)
  • 2:00 pm GMT: U.S. NAHB builders survey (60 expected, 59 previous)

Asian Session Forex Recap

Last Week’s Top Movers!

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!