London Session Forex Recap – August 19, 2016

  • German PPI m/m: 0.2% vs. 0.1% expected, 0.4% previous
  • German PPI y/y: -2.0% vs. -2.1% expected, -2.2% previous
  • U.K. public sector net borrowing: -£1.47B vs. -£1.20B expected, £7.51B previous
  • Canada’s CPI and retail sales readings coming up

Risk aversion returned and commodities fell, so the Aussie and the Kiwi were both under pressure during the morning London session. And interestingly enough, the Greenback rather than the yen was the safe-haven of choice during the session.

Major Events/Reports:

Gloomy mood to end the week – Risk sentiment switched back to risk-off during today’s morning London session, with most of the major European equity indices printing losses.

  • The pan-European FTSEurofirst 300 was down by 0.54% to 1,342.53
  • The blue-chip Euro Stoxx 50 was down by 0.89% to 2,966.50
  • The U.K.’s FTSE 100 was down by 0.25% to 6,852.10
  • The DAX was down by 0.55% to 10,545.30

U.S. equity futures also got pulled down, so the risk-off vibes may carry over into the U.S. session.

  • The S&P 500 futures index was down by 0.27% to 2,177.50
  • The Nasdaq futures index was down by 0.30% to 4,794.12

Market analysts are mostly blaming the gloomy mood in Europe to yesterday’s hawkish comments from top Fed officials.

Commodities torpedoedCommodities got hit pretty much across the board during the morning London session.

Despite the risk-off mood, precious metals couldn’t attract enough buyers:

  • Gold was down by 0.54% to $1,349.85 per troy ounce
  • Silver was down by 1.48% to $19.447 per troy ounce

Base metals got hit and were leaking red:

  • Copper was down by 0.35% to $2.160 per pound
  • Aluminum was down by 1.22% to 1,666.75 per kilogram
  • Zinc was down by 0.39% to $2,285.75 per dry metric ton

Oil benchmarks were also sinking:

  • U.S. WTI crude oil was down by 0.73% to $47.13 per barrel
  • Brent blend crude oil was down by 0.12% to $49.91 per barrel

The broad-based retreat was likely due to profit-taking after a net positive week, although it’s also possible that market players were dumping commodities in response to the Greenback’s recent recovery.

Major Currency Movers:

AUD & NZD – The higher-yielding Aussie and Kiwi both got a double whammy from the broad-based commodities retreat and the overall risk-off vibes.

AUD/USD was down by 30 pips (-0.39%) to 0.7614, AUD/CAD was down by 12 pips (-0.12%) to 0.9771, AUD/JPY was down by 21 pips (-0.27%) to 76.30

NZD/USD was down by 25 pips (-0.34%) to 0.7255, NZD/JPY was down by 16 pips (-0.21%) to 72.70, NZD/CAD was down by 6 pips (-0.06%) to 0.9311

USD – The Japanese yen is usually the safe-haven of choice for most forex traders, but that was not here. In today’s morning London session, it was the Greenback that attracted most of the safe-haven flows, likely because of yesterday’s positive rhetoric from top Fed officials.

USD/JPY was up by 12 pips (+0.12%) to 100.20, USD/CAD was up by 35 pips (+0.27%) to 1.2832, USD/CHF was up by 35 pips (+0.37%) to 0.9586

CHF – The Swissy is a safe-haven currency as well, but it was one of the weaker currencies during the session. There weren’t any catalysts for the Swissy’s weakness, but I would not rule out another intervention from the SNB.

EUR/CHF was up by 16 pips (+0.15%) to 1.0852, NZD/CHF was up by 4 pips (+0.06%) to 0.6957, CAD/CHF was up by 8 pips (+0.11%) to 0.7470

Watch Out For:

  • 12:30 pm GMT: Headline (0.0% expected, 0.2% previous) and core (0.0% expected, 0.0% previous) readings for Canada’s CPI
  • 12:30 pm GMT: Headline (0.5% expected, 0.2% previous) and core (0.3% expected, 0.9% previous) readings for Canada’s retail sales

Asian Session Forex Recap

U.S. Session Forex Recap

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