London Session Forex Recap – Sept. 8, 2016

  • French final non-farm payrolls q/q: unchanged at 0.2% as expected
  • ECB maintains refinancing rate at 0.00%
  • ECB maintains marginal lending rate at 0.25%
  • ECB maintains deposit rate at -0.40%
  • ECB maintains QE program at €80B
  • ECB press conference coming up; watch it live here

The ECB decided to keep its powder dry yet again, so euro pairs pushed this way and that, but ultimately went nowhere. Risk aversion during the morning London session gave the euro and the Swissy an early boost, though. However, that may change depending on what Draghi has to say in the upcoming presser.

Major Events/Reports:

Skittish risk sentiment in Europe – Most of the major European equity indices were edging their way higher at the start of the session. However, they slowly but broadly began retreating about halfway through the session, as the ECB rate statement began to loom ever closer. They were then finally pushed into the red when the ECB announced that it was keeping its current monetary policy.

  • The pan-European FTSEurofirst 300 was down by 0.29% to 1,375.41
  • The blue-chip Euro Stoxx 50 was down by 0.35% to 3,080.00
  • The DAX was down by 0.61% to 10,687.00

Aside from the slide in equities, another sign of risk aversion during the session was the demand for precious metals, which are considered traditional safe-havens.

  • Gold was up by 0.16% to $1,351.35 per troy ounce
  • Silver was up by 0.68% to $19.983 per troy ounce

ECB monetary policy decision – The ECB decided to maintain its current monetary policy. Not only that, its official press statement was a word-for-word reproduction of its July statement. I kid you not. No change whatsoever, yo!

If you can’t recall the previous ECB statement and you’re too busy to click the links, then just know that the ECB “continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.”

The ECB also said yet again that “the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.”

Forex traders are now waiting for what Draghi and company have to say in the upcoming ECB press conference. By the way, you can watch the ECB press conference live here.

Major Currency Movers:

EUR & CHF – The euro and the Swissy were well-supported before the ECB decision, likely because of the risk-off vibes during the session. Although late preemptive positioning by forex traders could have also been a factor.

And when the ECB announced that it was maintaining its current monetary policy, both the euro and the Swissy got swamped by buyers. However, sellers were on the sidelines, nullifying most of the two currencies’ gains on the ECB decision.

Still, the demand from earlier allowed the two currencies to end the session on a high note against their forex rivals. Against each other, the euro apparently had a slight advantage since EUR/CHF was up by 4 pips (+0.04%) to 1.0921.

EUR/USD was up by 33 pips (+0.30%) to 1.1292, EUR/CAD was up by 56 pips (+0.39%) to 1.4545, EUR/JPY was up by 32 pips (+0.28%) to 114.76

USD/CHF was down by 25 pips (-0.26%) to 0.9671, NZD/CHF was down by 30 pips (-0.42%) to 0.7209, CAD/CHF was down by 26 pips (-0.35%) to 0.7508

Watch Out For:

  • 12:30 pm GMT: ECB press conference; watch it live here
  • 12:30 pm GMT: U.S. initial jobless claims (265K expected, 263K previous)
  • 12:30 pm GMT: Canada’s capacity utilization rate (79.6% expected, 81.4% previous)
  • 12:30 pm GMT: Canadian building permits (2.9% expected, -5.5% previous)
  • 12:30 pm GMT: Canadian NHPI (0.2% expected, 0.1% previous)
  • 3:00 pm GMT: U.S. crude oil inventories (0.6M expected, 2.3M previous)
  • 7:00 pm GMT: U.S. consumer credit ($16.00B expected, $12.32B previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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