London Session Forex Recap – August 17, 2016

  • U.K. claimant count change: -8.6K vs. 9.0K expected, 0.9K previous
  • U.K. average earnings index: 2.4% as expected vs. 2.3% previous
  • U.K. jobless rate: steady at 4.9% as expected
  • Swiss ZEW economic expectations: -2.8 vs. 5.9 previous
  • FOMC meeting minutes will be released later

Risk aversion prevailed and commodities were retreating during today’s morning London. As a result, the higher-yielding Aussie and Kiwi both got whupped. Meanwhile, the safe-havens got some love, particularly the yen.

Major Events/Reports:

U.K. jobs reportThe U.K.’s jobless rate for the three months to June (all of Q2 basically) came in at 4.9% as expected. Meanwhile, the number of employed people increased by 172K, as the employment rate ticked higher to an all time high of 74.5%. The average earnings index also came in at +2.4%, which is a tick higher than the previous period’s +2.3%.

Furthermore, actual hours worked per week increased by 0.1%, which hints at higher productivity. Better still, the number of people claiming unemployment benefits in July decreased by 8,6K, which is great since an increase was expected.

Overall, the jobs report was positive. And while the jobs report did give the pound a boost, it had little staying power since the pound’s price action was choppy. Also, pound pairs ultimately ended the session mixed.

More risk aversion – The European equities market was hit with another wave of risk aversion during today’s morning London session. As a result, most of the major European equities got pushed into the red.

  • The pan-European FTSEurofirst 300 was down by 0.42% to 1,346.98
  • The blue-chip Euro Stoxx 50 was down by 0.96% to 2,995.00
  • The U.K.’s FTSE 100 was down by 0.18% to 6,881.70
  • The DAX was down by 1.09% to 10,560.00

The prevalence of risk aversion also took a toll on U.S. equity futures, since they erased their gains and were now in the red for the day.

  • The S&P 500 futures index was down by 0.06% to 2,175.50
  • The Nasdaq futures index was down by 0.03% to 4,797.25

The downbeat mood was apparently due to disappointing news for several major companies, as well as some profit-taking, according to market analysts.

Commodities clobbered – After rising for two days, thanks in part to the Greenback’s weakness, commodities turned tail and retreated across the board today.

Precious metals got slapped lower, despite the prevalence of risk aversion:

  • Gold was down by -0.70% to $1,347.45 per troy ounce
  • Silver was down by 1.28% to $19.620 per troy ounce

Base metals were mixed but were mostly bleeding out:

  • Copper was down by 1.15% to $2.147 per pound
  • Nickel was down by 0.64% to $10,182.50 per dry metric ton

Not even oil benchmarks were safe:

  • U.S. WTI crude oil was down by 1.01% to $46.11 per barrel
  • Brent blend crude oil was down by 1.00% to $48.74 per barrel

Market analysts couldn’t pinpoint the exact reason for the broad-based slide in commodity prices. However, the slide was probably due to renewed Greenback strength yesterday, which made dollar-denominated commodities relatively expensive and ripe for selling.

Major Currency Movers:

AUD & NZD – The Aussie and the Kiwi, which are both higher-yielding comdolls, both got a double whammy from the risk-off mood and the broad-based commodities slide.

The Aussie was noticeably more vulnerable, though, possibly because some Aussie bulls were also unwinding their positions ahead of Australia’s jobs report. By the way, Forex Gump has a write-up on that top-tier event, so read it here if you’re planning to trade it.

AUD/USD was down by 38 pips (-0.50%) to 0.7633, AUD/CHF was down by 39 pips (-0.54%) to 0.7351, AUD/JPY was down by 57 pips (-0.74%) to 76.83

NZD/USD was down by 25 pips (-0.35%) to 0.7236, NZD/JPY was down by 41 pips (-0.56%) to 72.86, NZD/CHF was down by 26 pips (-0.36%) to 0.6970

JPY – The safe-haven currencies (USD, JPY, CHF) were getting some much needed love during the session. However, the yen was apparently the safe-haven of choice for most forex traders since it won out against its fellow safe-havens.

USD/JPY was down by 23 pips (-0.23%) to 100.66, CHF/JPY was down by 20 pips (-0.19%) to 104.52, CAD/JPY was down by 19 pips (-0.25%) to 78.15

Watch Out For:

  • 2:30 pm GMT: U.S. crude oil inventories (0.3M expected, 1.1M previous)
  • 5:00 pm GMT: St. Louis Fed President James Bullard is scheduled to speak
  • 6:00 pm GMT: July FOMC meeting minutes will be released

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!