London Session Forex Recap – Oct. 7, 2016

  • German industrial production m/m: 2.5% vs. 1.1% expected, -1.5% previous
  • French industrial production m/m: 2.1% vs. 0.6% expected, -0.6% previous
  • Swiss foreign currency reserves: CHF 628B vs. CHF 627B previous
  • Halifax U.K. HPI m/m: 0.1% vs. 0.0% expected, -0.2% previous
  • U.K. industrial production m/m: -0.4% vs. 0.1% expected, 0.1% previous
  • U.K. industrial production y/y: 0.7% vs. 1.3% expected, 2.1% previous
  • U.K. manufacturing production m/m: 0.2% vs. 0.4% expected, -0.9% previous
  • U.K. manufacturing production y/y: 0.5% vs. 0.8% expected, 0.8% previous
  • U.K. goods trade balance: -£12.11B vs. -£11.25B expected, -£9.51B previous
  • U.S. NFP report coming up
  • 4 Fed officials lined up to speak after NFP report
  • Canadian jobs report also coming up

It’s another NFP Friday so some currency pairs ended up trading sideways while others had choppy price action, as forex traders hunkered down ahead of the NFP report. The looming NFP report didn’t stop forex traders from pushing down the pound, though.

Major Events/Reports:

NFP Friday! – Today is another NFP Friday! And as usual, both directional movement and volatility got sapped on many pairs, as forex traders sat on their hands ahead of the NFP report.

By the way, if you’re planning to trade the September NFP report and need to get up to speech, then make sure read up on Forex Gump’s Forex Preview here.

While you’re at it, also note that Canada will be releasing its jobs report at the same time. Forex Gump has another write-up on that, so read it here, if you’re interested.

Finally, note that there are four (4) Fed officials line up after the NFP report, and they’re all voting FOMC members (*gasp*). So if they do decide to comment on the NFP report afterwards, their words will have a lot of weight, perhaps enough to kick the Greenback around after the NFP report has had enough fun with the Greenback.

U.K. trade gap widens – The U.K.’s goods trade deficit widened from £9.51 billion to £12.11 billion in August. The wider gap was due to the 5.1% increase in imports to £20.77 billion, although the 0.6% fall in exports to £12.42 billion also helped widen the deficit a bit.

Risk aversion ahead of NFP report – European market players were pretty skittish ahead of the NFP report since most of the major European equity indices were leaking red.

  • The pan-European FTSEurofirst 300 was down by 0.85% to 1,339.27
  • The blue-chip Euro Stoxx 50 was down by 0.86% to 3,005.00
  • Germany’s DAX was down by 0.66% to 10,499.60

U.S. equity futures were also bleeding out.

  • S&P 500 futures were down by 0.32% to 2,149.50
  • Nasdaq futures were down by 0.31% to 4,856.75

Meanwhile, precious metals, which are considered traditional safe-havens, were happily in the green.

  • Gold was up by 0.48% to $1,259.05 per troy ounce
  • Silver was up by 0.25% to $17.388 per troy ounce

However, one major European equity index that wasn’t in the red was the U.K.’s FTSE 100.

  • The U.K.’s FTSE 100 was up 0.76% to 7,052.50

The general aversion to risk was likely due to the skittishness that generally prevails ahead of top-tier economic reports like the NFP report. Although according to market analysts, poor corporate earnings and the Euro Zone’s weak economy was also weighing down on European equities. The FTSE 100’s defiance, meanwhile, was due to the pound’s plunge earlier, which spurred demand for shares of British exporters.

Oil slapped lower – Oil benchmarks were drifting ever lower during the morning London session.

  • U.S. WTI crude oil was down by 0.40% to $50.24 per barrel
  • Brent blend crude oil was down by 0.63% to $52.18 per barrel

Oil has been rallying for four straight days, so we’re likely just seeing some profit-taking ahead of the NFP report and/or to avoid weekend risk. However, some market analysts said that today’s slide in oil prices was due to renewed oversupply jitters amid wavering confidence in the OPEC plan to cut oil production.

Major Market Movers:

GBP – After losing very hard and then clawing back a large chunk of that loss during the earlier Asian session, the pound extended its losses yet again during the morning London session. The pound’s weakness may have been a reaction to the poor economic data during the session. Although it’s also possible that market players who were late to the “flash-crash” earlier were trying to join in. Whatever the case may truly be, the pound ended up as the weakest currency of the session.

GBP/USD was down by 81 pips (-0.66%) to 1.2361, GBP/JPY was down by 120 pips (-0.92%) to 128.13, GBP/CHF was down by 76 pips (-0.63%) to 1.2143

EUR – The euro managed to trump all its forex rivals during the morning London session, probably because of the slide in European equities and broad-based selling of the pound.

EUR/USD was up by 27 pips (+0.25%) to 1.1141, EUR/CHF was up by 29 pips (+0.27%) to 1.0944, EUR/GBP was up by 81 pips (+0.91%) to 0.9010

CAD – The slide in oil prices was likely weighing down on the Loonie. However, it’s also possible that forex traders were opening preemptive positions ahead of Canada’s jobs report for later.

USD/CAD was up by 28 pips (+0.22%) to 1.3274, EUR/CAD was up by 67 pips (+0.46%) to 1.4788, NZD/CAD was up by 39 pips (+0.42%) to 0.9479

Watch Out For:

  • 12:30 pm GMT: U.S. non-farm payrolls (170K expected, 151K previous)
  • 12:30 pm GMT: U.S. jobless rate (steady at 4.9% expected)
  • 12:30 pm GMT: U.S. average hourly earnings (0.3% expected, 0.1% previous)
  • 12:30 pm GMT: Canada’s jobless rate (steady at 7.0% previous)
  • 12:30 pm GMT: Canadian net employment change (7.5K expected, 26.2K previous)
  • 2:00 pm GMT: Canada’s Ivey PMI (53.1 expected, 52.3 previous)
  • 2:30 pm GMT: BOC business outlook survey will be released
  • 2:30 pm GMT: Federal Reserve Governor Stanley Fischer has a speech
  • 4:45 pm GMT: Cleveland Fed President Loretta Mester will speak
  • 7:00 pm GMT: Kansas City Fed President Esther L. George will deliver a speech
  • 8:00 pm GMT: Federal Reserve Governor Lael Brainard scheduled to speak
  • 8:00 pm GMT: BOC Senior Deputy Governor Carolyn Wilkins will speak in a panel discussion

See also:

Asian Session Forex Recap

U.S. Session Recap

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