London Session Forex Recap – August 29, 2016

  • U.K. Summer Bank Holiday
  • Germany’s BGA trade association cuts 2016 export growth forecast
  • Italian Manufacturing confidence: 101.1 vs.  102.5 forecast, 102.9 previous

A quiet start for European traders to start the week with a lack of major economic data and U.K. traders on holiday during the morning London session.

Major Events/Reports:

Euro & British pound lower – What little volatility that we got came in the form of weakness in the euro and the pound, the former likely on a combo of Germany’s BGA trade association cutting their export growth forecast for 2016 to between 1.8% – 2.0%, and possibly on fresh Italian manufacturing confidence falling to 101.1 in August–another tough blow to a country just experiencing terrible tragedy and loss from last week’s earthquake.

Sterling’s weakness continues on from the Asia session, and with no direct catalyst, it’s likely we’re seeing a combination of risk aversion sentiment sparked by Yellen’s speech at Jackson Hole on Friday (case for rate hikes grows), and of course, the underlying fears and uncertainty of the Brexit situation, recently highlighted by comments from German Vice Chancellor Sigmar Gabriel on how it will lead to “big problems” if the process is mishandled.

Risk sentiment is mixed to start the week – Most of the European equity indices started off on a lower note, with exception to the U.K. blue chip stocks:

  • The pan-European FTSEurofirst 300 was down by -0.41% to 1,347.17
  • The blue-chip Euro Stoxx 50 was down by -0.73% to 2,988.29
  • The U.K.’s FTSE 100 is up by 0.31% to 6,838.05
  • The DAX was down by -0.65% to 10,519.15

U.S. equity futures are little changed ahead of the U.S. equity open:

  • The S&P 500 futures index is up by 0.01% to 2,169.00
  • The Nasdaq futures index is down by -0.01% to 4,785.50

Commodities mostly lower – Commodities are generally moving along with equities, lower on this session, mostly in energy as production cuts seem less likely.

Metals are lower despite the risk-off mood:

  • Gold was down by -0.27% to $1,322.30 per troy ounce
  • Silver was down by -0.69% to $18.65 per troy ounce

Base metals are up slightly:

  • Copper is up by 0.10% to $2.0795 per pound
  • Aluminum is up by 0.03% to $1,687.25 per kilogram

Oil benchmarks are on the move lower as well:

  • U.S. WTI crude oil was down by -1.47% to $46.94 per barrel
  • Brent blend crude oil was down by -1.46% to $49.19 per barrel

Major Currency Movers:

GBP – There were no direct catalysts for the pound during the session, but the pound has taken a beating on risk aversion flows.

GBP/USD was down by 59 pips (-0.45%) to 1.3069, GBP/CAD is down by 51 pips (-0.30%) to 1.7012, GBP/CHF was up by 32 pips (-0.25%) to 1.2803

EUR – The euro is also back footing on the session for the most part, only managing to gain ground on the pound and the yen on the session:

EUR/USD is down 25 pips (-0.23%) to 1.1167, EUR/NZD is down 15 pips (-0.10%) to 1.5437, EUR/GBP was up by 26 pips (+0.32%) to 0.8544

Watch Out For:

  • 1:30 pm GMT: U.S. Core PCE Price Index (0.1% forecast/previous)
  • 1:30 pm GMT: U.S. Personal Spending (0.3% forecast vs. 0.4% previous)
  • 1:30 pm GMT: U.S. Personal Incom (0.4% forecast vs. 0.2% previous)

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Last Week’s Top Movers

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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