London Session Forex Recap – Sept. 7, 2016

  • German industrial production m/m: -1.5% vs. 0.1% expected, 1.1% previous
  • German industrial production y/y: -1.2% vs. 0.2% expected, 0.9% previous
  • French current account: -€2.6B vs. -€0.8B previous
  • French trade balance: -€4.51B vs. -€3.60B expected, -€3.45B previous
  • U.K. Halifax HPI m/m: -0.2% vs. -0.1% expected, -1.0% previous
  • U.K. industrial production m/m: 0.1% vs. -0.2% expected, 0.1% previous
  • U.K. manufacturing production m/m: -0.9% vs. -0.3% expected, -0.2% previous
  • BOC interest rate decision and statement later

The pound got a severe beat-down during the session, thanks to disappointing economic data. Meanwhile, the safe-havens and the higher-yielding currencies duked it out in the background.

Major Events/Reports:

Disappointing U.K. data – The U.K. got slapped with some rather disappointing economic data during the morning London session.

First up was the House Price Index (HPI) from Halifax. And the reading for August came in at -0.2% month-on-month (-0.1% expected, -1.0% previous) and 6.9% year-on-year (7.0% expected, 8.4% previous). The monthly reading marks the second straight month of declines while the annual reading is the weakest increase since November 2013. And both readings imply that the housing market in the U.K. is beginning to cool down in the aftermath of the Brexit referendum.

Moving on, industrial production in the U.K. managed to edge out a 0.1% month-on-month increase in July, but manufacturing output contracted by 0.9%, which is bigger than the expected 0.3% fall and the poorest reading since July 2015. Looking at the details of the report, the decline in manufacturing output was broad-based, with only the food manufacturing and and textiles and machinery industries reporting an expansion.

Modest risk appetite in Europe – Most of the major European equity indices were slightly in the green during the morning London session. And some market analysts attributed the most risk-on vibes to lower expectations that the Fed will be hiking again soon. Meanwhile, other analysts are pointing to cautious optimism that the ECB may introduce further easing moves tomorrow.

By the way, if you’re planning to trade the ECB statement, you may want to read up on Forex Gump’s write-up on the 4 Things to Keep in Mind for the ECB Decision.

  • The pan-European FTSEurofirst 300 was up by 0.09% to 1,376.12
  • The blue-chip Euro Stoxx 50 was up by 0.45% to 3,084.00
  • The U.K.’s FTSE 100 was up by 0.05% to 6,829.30
  • The DAX was up by 0.34% to 10,723.00

Major Currency Movers:

NZD & AUD – The modest appetite for risk during the morning London session sent yield seekers towards the higher-yielding Kiwi and Aussie. The Kiwi was particularly in high demand, so much so that it ended up as the best-performing currency of the session.

NZD/USD was up by 33 pips (+0.44%) to 0.7463, NZD/JPY was up by 47 pips (+0.63%) to 75.85, NZD/CHF was up by 27 pips (+0.38%) to 0.7233

AUD/USD was up by 87 pips (+0.08%) to 0.7677, AUD/JPY was up by 21 pips (+0.27%) to 78.01, AUD/CAD was up by 13 pips (+0.14%) to 0.9863

GBP – The pound had a steady start during the session, but got ambushed by the sellers when the poor economic data began coming out, causing the pound to end up as the weakest currency of the session.

GBP/USD was down by 51 pips (-0.38%) to 1.3364, GBP/NZD was down by 143 pips (-0.78%) to 1.7907, GBP/AUD was down by 78 pips (-0.45%) to 1.7410

Watch Out For:

  • 1:15 pm GMT: U.K. inflation report hearings
  • 2:00 pm GMT: BOC interest rate decision (steady at 0.50% expected); Read Forex Gump’s trading guide here
  • 2:00 pm GMT: Canada’s Ivey PMI (56.5 expected, 57.0 previous)
  • 2:00 pm GMT: U.K. NIESR GDP estimate (0.3% previous)
  • 2:00 pm GMT: Kansas City Fed President Esther L. George will testify
  • 2:00 pm GMT: U.S. JOLTS job openings (5.58M expected, 5.62M previous)
  • 6:00 pm GMT: Fed’s Beige Book will be released
  • 10:55 pm GMT: RBA Deputy Governor Philip Lowe has a speech

Asian Session Forex Recap

U.S. Session Forex Recap

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