London Session Forex Recap – August 30, 2016

  • Swiss KOF leading indicator: 99.8 vs. 102.0 expected, 103.5 previous
  • BOE net lending to individuals: £3.8B vs. £3.1B expected, £3.2B previous
  • BOE net consumer credit: £1.2B vs. £1.7B expected, £1.9B previous
  • BOE mortgage approvals: 60.9K vs. 61.9K expected, 64.2K previous
  • Euro Zone consumer sentiment: -8.5 as expected, -7.9 previous
  • Euro Zone business climate index: 0.02 vs. 0.36 expected, 0,38 previous
  • Euro Zone industrial sentiment: -4.4 vs. -2.7 expected, -2.6 previous
  • Euro Zone economic sentiment: 103.5 vs. 104.1 expected, 104.5 previous
  • German preliminary HICP m/m: -0.1% vs. 0.1% expected, 0.4% previous
  • German preliminary HICP y/y: 0.3% vs. 0.5% expected, 0.4% previous

Price action was rather choppy and volatility was relatively subdued during today’s morning London session. Most currency pairs were trading sideways, but pound pairs were clearly on the move, with the pound giving its forex rivals a good beating.

Major Events/Reports:

Fewer U.K. mortgage approvals and consumer credit – According to a report released by the BOE, the number of mortgage approvals in the U.K. for the month of July was only 60.9K. This is below the expected 61.9K figure and down from the previous 64.2K reading. Also, this is the lowest reading since January of this year and implies that the U.K.’s housing market is cooling down.

Meanwhile, consumer credit in July only rose by £1.2 billion, missing the expected increase of £1.7 billion. Moreover, this is below the previous month’s £1.9 billion and a the weakest increase since August 2015 to boot.

Fischer speaks – Fed Vice Chairman Stanley Fischer was interviewed on Bloomberg TV earlier. He didn’t provide any specifics on the timing of the next rate hike, saying instead that “The work of the central bank is never done, and I don’t think you can say ‘one and done’ and that’s it.” He then added that “We [the Fed] can choose the pace, but we choose the pace on the basis of data that’s coming in.”

He still has a hawkish tone, but his statement seems to be a step back from his Friday statement where he said that Yellen’s Jackson Hole statement “was consistent” with a September rate hike. But then again, Fischer did say back on Friday that “these are not things we know until we see the data,” referring to the possibility of a September rate hike.

Nonetheless, forex traders didn’t seem to think that today’s statement was a big deal since USD pairs barely reacted.

Risk-on! (only in Europe, though) – Risk appetite returned to European markets, with most of the major European equity indices well in the green by the end of the morning London session.

  • The pan-European FTSEurofirst 300 was up by 0.45% to 1,356.43
  • The blue-chip Euro Stoxx 50 was up by 0.92% to 3,028.00
  • The U.K.’s FTSE 100 was up by 0.08% to 6,842.90
  • The DAX was up by 0.98% to 10,647.30

Unfortunately, the risk-friendly environment in Europe didn’t seem to have a positive impact on U.S. equity futures:

  • The S&P 500 futures index was down by 0.02% to 2,179.00
  • The Nasdaq futures index was down by 0.17% to 4,785.12

Market analysts attributed the risk-taking in Europe to positive corporate news and higher optimism over global growth that gave cyclical European stocks a boost.

Major Currency Movers:

GBP – The pound dished out the pain from the get-go, even though there were no apparent catalysts. Pound pairs even shrugged off the poor readings for consumer credit and mortgage approvals, reaching new intraday highs in the process.

GBP/USD was up by 43 pips (+0.33%) to 134.09, GBP/CHF was up by 53 pips (+0.42%) to 1.2848, GBP/JPY was up by 42 pips (+0.32%) to 134.07

Watch Out For:

  • 12:30 pm GMT: Canadian industrial PPI (-0.3% expected, 0.6% previous)
  • 12:30 pm GMT: Canadian RMPI (-1.2% expected, 1.8% previous)
  • 12:30 pm GMT: Canadian current account (-$20.2 billion expected, -$16.8B previous)
  • 1:00 pm GMT: U.S. S&P Case-Shiller HPI (5.12% expected, 5.24% previous)
  • 2:00 pm GMT: U.S. CB consumer confidence (97.0 expected, 97,3 previous)

Asian Session Forex Recap

U.S. Session Forex Recap

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