London Session Forex Recap – Oct. 10, 2016

  • Swiss jobless rate: 3.3% vs. 3.4% expected, 3.3% previous
  • German trade balance: €20.2B vs. €19.0B expected, €19.4B previous
  • German current account: €17.9B vs. €20.2B previous
  • Italian industrial production: 1.7% vs. -0.2% expected, 0.7% previous
  • French BOF business sentiment: 98 vs. 99 expected
  • Sentix Euro Zone investor confidence: 8.5 vs. 6.2 expected, 5.6 previous

There were only low-tier items on the docket today, so forex traders turned mainly to commodities and risk sentiment for direction. The pound, meanwhile, recovered a bit more from last week’s plunge.

Major Events/Reports:

Commodities rally hard – Commodities had a little bullish party to start the week.

Precious metals were very well supported:

  • Gold was up by 0.86% to $1,262.65 per troy ounce
  • Silver was up by 2.28% to $17.777 per troy ounce

Base metals were mostly in the green:

  • Copper was up by 0.76% to $2.180 per pound
  • Nickel was up by 1.27% to $10,347.50 per dry metric ton

Oil benchmarks were happily in positive territory:

  • U.S. crude oil was up by 1.02% to $50.32 per barrel
  • Brent crude oil was up by 1.17% to $52.54 per barrel

Market analysts couldn’t pinpoint the reason for the broad-based commodities rally, but the broad-based demand for base and precious metals was apparently sparked by Chinese demand after the long holiday in China.

Oil, meanwhile, was actually in the red earlier before flipping back into the green during the course of the morning London session. The catalyst for the sudden demand for oil is not clear. However, one probable catalyst is Russian Energy Minister Alexander Novak’s comment that Russia will consider OPEC’s proposal to cut oil output, although Novak also added that “a more favorable situation would be to maintain output levels.”

A little optimism to start the week – European equity indices were actually weighed down by financials earlier, but made a turnaround, with energy shares leading the way.

  • The pan-European FTSEurofirst 300 was up by 0.43% to 1,344.54
  • The blue-chip Euro Stoxx 50 was up by 0.68% to 3,023.00
  • Germany’s DAX was up by 0.87% to 10,581.00
  • The U.K.’s FTSE 100 was up 0.76% to 7,052.50

U.S. equity futures were also doing pretty well.

  • S&P 500 futures were up by 0.47% to 2,156.50
  • Nasdaq futures were up by 0.42% to 4,879.38

As I mentioned earlier, energy shares were leading the way, so the rebound in oil prices during the session was likely the reason for the upbeat mood.

Major Market Movers:

CAD – The Loonie showed weakness at the start of the session, but began to recover (and then some) when oil also recovered.

EUR/CAD was down by 22 pips (-0.16%) to 1.4797 with 1.4841 as session high, NZD/CAD was down by 11 pips (-0.11%) to 0.9458 with 0.9492 as session high, USD/CAD was down by 2 pips (-0.02%) to 1.3256 1.3278 as session high

GBP – There were no catalysts, but pound pairs were steadily gaining back some of the ground they lost last week. Interestingly enough, the pound even ended up as the best-performing currency of the session.

GBP/USD was up by 24 pips (+0.20%) to 1.2390, GBP/JPY was up by 57 pips (+0.45%) to 128.11, GBP/CHF was up by 65 pips (+0.54%) to 1.2166

JPY and CHF – The risk-on vibes during the morning London session likely dampened demand for the safe-haven yen and Swissy, since the two currencies pretty much lost out to all their peers .

USD/JPY was up by 26 pips (+0.25%) to 103.39, AUD/JPY was up by 17 pips (+0.22%) to 78.49, EUR/JPY was up by 10 pips (+0.09%) to 115.38

USD/CHF was up by 34 pips (+0.35%) to 0.9819, EUR/CHF was up by 20 pips (+0.18%) to 1.0958, AUD/CHF was up by 24 pips (+0.32%) to 0.7454

Watch Out For:

  • Thanksgiving Day holiday in Canada today
  • Columbus Day holiday in the U.S. of A. today
  • 2:00 pm GMT: CB U.S. employment trends index (128.0 previous)
  • 9:45 pm GMT: New Zealand’s retail card spending (0.8% expected, -0.4% previous)

See also:

Asian Session Forex Recap

Last Week’s Top Forex Movers

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

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical weeks!