London Session Forex Recap – August 22, 2016

  • SNB sight deposits (domestic): CHF 436,095M vs. CHF 434,742M previous

No data? No problem! Forex traders turned mainly to risk sentiment, commodities, and last week’s themes for direction during the morning London session.

Major Events/Reports:

SNB sight deposits increase – Sight deposits of domestic Swiss banks rose from CHF 434,742 million to CHF 436,095 million during the week ending on August 19. This implies that the SNB was likely intervening in the markets.

But as I note in my Top Forex Market Movers of the Week, however, the Swissy ended up being the strongest currency last this. This thereby means that the SNB was not able to fight off the safe-haven demand for the Swissy last week.

Risk aversion to start the week – Most of the European equity indices started off on a positive note, but were printing losses by the end of the morning London session:

  • The pan-European FTSEurofirst 300 was down by 0.19% to 1,337.23
  • The blue-chip Euro Stoxx 50 was down by 0.58% to 2,953.00
  • The U.K.’s FTSE 100 was down by 0.56% to 6,820.50
  • The DAX was down by 0.83% to 10,457.10

U.S. equity futures also got pulled lower by the lack of risk-taking, signalling a potential spillover into the U.S. session:

  • The S&P 500 futures index was down by 0.21% to 2,177.25
  • The Nasdaq futures index was down by 0.19% to 4,797.88

Market analysts can’t put their finger on the reason for the turnaround. But given that energy and mining companies were the main losers, the general risk aversion was like due to the …

Commodities carnage – Commodities continued last Friday’s theme by sliding ever lower. And it was a broad-based slide, too.

There was little to no love for precious metals, despite the risk-off mood:

  • Gold was down by 0.40% to $1,340.75 per troy ounce
  • Silver was down by 1.92% to $18.947 per troy ounce

Base metals got their butts kicked:

  • Copper was down by 1.29% to $2.139 per pound
  • Aluminum was down by 0.45% to $1,659.75 per kilogram
  • Nickel was down by 1.69% to $10,182.50 per dry metric ton

Oil benchmarks got a really hard beating:

  • U.S. WTI crude oil was down by 2.67% to $47.80 per barrel
  • Brent blend crude oil was down by 3.03% to $49.34 per barrel

The broad-based retreat to start the week was likely due to the Greenback’s strength since Friday, which made commodities a tad less attractive to buy. Oil was noticeable weak, however, likely because it was getting extra selling pressure due to reports about an increase in Chinese oil exports, as well as the another increase in the number of U.S. oil rigs.

Major Currency Movers:

GBP – There were no direct catalysts for the pound during the session, but the pound was in demand. This was likely a continuation of last week’s theme, which was inspired mainly by a couple positive post-referendum economic reports.

GBP/USD was up by 50 pips (+0.39%) to 1.3101, GBP/CAD was up by 45 pips (+0.27%) to 1.6917, GBP/CHF was up by 38 pips (+0.31%) to 1.2617

USD – The Greenback was the weakest currency of the session, surprisingly enough. Greenback pairs got a lift during the earlier Asian session, thanks to hawkish remarks from Fed Vice Chairperson Stanley Fischer over the weekend. However, Greenback pairs were slowly giving back their gains during the morning London session. There was no apparent catalyst for this, though.

EUR/USD was up by 22 pips (+0.20%) to 1.1304, NZD/USD was up by 19 pips (+0.27%) to 0.7251, AUD/USD was up by 19 pips (+0.25%) to 0.7613

JPY – The safe-haven yen was the second-strongest currency after the pound, at least during the morning London session. Yen demand was likely fueled by safe-haven flows, with the Swissy being less attractive due to the increase in SNB sight deposits.

USD/JPY was down by 22 pips (-0.22%) to 100.53, CAD/JPY was down by 12 pips (-0.16%) to 77.82, CHF/JPY was down by 16 pips (-0.16%) to 104.37

Watch Out For:

  • 12:30 pm GMT: Canadian wholesale sales (0.5% expected, 1.8% previous)
  • 2:30 pm GMT: Australia’s CB leading index (0.1% 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!