London Session Forex Recap – Oct. 13, 2016

  • German HICP m/m: unchanged at 0.0% as expected
  • German HICP y/y: unchanged at 0.5% as expected

There was some rather wonky price action during the morning London session, as the safe-haven currencies retreated while the higher-yielding ones advanced, even though risk aversion appeared to be the dominant sentiment.

Major Events/Reports:

More risk aversion – Risk aversion was apparently the name of the game in Europe, because most of the major European equity indices were bleeding out.

  • The pan-European FTSEurofirst 300 was down by 1.06% to 1,322.08
  • The blue-chip Euro Stoxx 50 was down by 1.25% to 2,969.00
  • Germany’s DAX was down by 1.32% to 10,383.70
  • The U.K.’s FTSE 100 was down 0.97% to 6,955.90

U.S. equity futures were also bleeding out, which is further evidence of the risk-off mood.

  • S&P 500 futures were down by 0.62% to 2,118.25
  • Nasdaq futures were down by 0.64% to 4,782.62

According to market analysts, mining stocks had the worst performance, thanks to the slide in base metals due to the poor Chinese trade data from earlier.

Commodities mostly higher – Commodities had a mixed performance during the morning London session, but were mostly in positive territory.

Precious metals were well-supported, probably because of the risk-off vibes.

  • Gold was up by 0.60% to $1,261.30 per troy ounce
  • Silver was up by 0.53% to $17.598 per troy ounce

Oil benchmarks, meanwhile, were actually in the red earlier, but were able to climb higher during the course of the session:

  • U.S. crude oil was up by 1.34% to $50.66 per barrel
  • Brent crude oil was up by 1.22% to $52.49 per barrel

Base metals were mout of luck, though:

  • Copper was down by 0.76% to $2.160 per pound
  • Nickel was down by 0.94% to $10,485.00 per dry metric ton

The recovery in most commodity prices was likely due to overall Greenback weakness, with the USD index down by 0.29% to 97.71 for the day.

There were also probably other drivers. As I mentioned earlier, the risk-off vibes may have stoked safe-haven demand for precious metals. Market analysts couldn’t pinpoint the reason for the turnaround in oil prices, though.  As for the lack of demand for base metals like copper, market analysts blamed that on the poor Chinese trade data from the earlier session.

Major Market Movers:

Comdolls – The higher-yielding Kiwi and Aussie just shrugged off the risk-off vibes, probably because of the general demand for commodities. Although both the Kiwi and the Aussie lost out to their peers during the earlier session, so it’s also possible that we’re just seeing some profit-taking. The Loonie, meanwhile, was able to do well during the session, probably because of the recovery in oil prices.

AUD/USD was up by 40 pips (+0.53%) to 0.7559, AUD/JPY was up by 35 pips (+0.46%) to 78.46, AUD/CHF was up by 30 pips (+0.41%) to 0.7468

NZD/USD was up by 20 pips (+0.29%) to 0.7068, NZD/JPY was up by 16 pips (+0.22%) to 73.36, NZD/CHF was up by 12 pips (+0.18%) to 0.6982

EUR/CAD was down by 21 pips (-0.15%) to 1.4617, CAD/JPY was up by 23 pips (+0.29%) to 78.37, CAD/CHF was up by 17 pips (+0.24%) to 0.7458

USD – All the safe-haven currencies felt some bearish pressure during the session. However, the Greenback was noticeably the most vulnerable, since it ended up as the weakest currency of the session.

There was no apparent catalyst for the Greenback’s vulnerability. Although it’s possible that we’re seeing some profit-taking by the Greenback longs. After all, the Greenback has been doing well for most of the week. Moreover, we’ve got the U.S. retail sales report and Fed Chair Yellen’s speech for tomorrow. By the way, Forex Gump has a write-up for the U.S. retail sales report, so read more on that here, if you plan to trade that top-tier event.

NZD/USD was down by 17 pips (-0.24%) to 0.7061, NZD/JPY was down by 7 pips (-0.10%) to 73.24, NZD/CHF was down by 12 pips (-0.18%) to 0.6983

Watch Out For:

  • 12:30 pm GMT: Canadian house price index (0.3% expected, 0.4% previous)
  • 12:30 pm GMT: U.S. import price index (0.2% expected, -0.2% previous)
  • 12:30 pm GMT: U.S. initial jobless claims (253K expected, 249K previous)
  • 3:00 pm GMT: U.S. crude oil inventories (0.4M expected, -3.0M previous)

See also:

Asian Session Forex Recap

U.S. Session Recap

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