London Session Forex Recap – Oct. 19, 2016

  • U.K. Claimant Count Rate: 2.3% vs. 2.2% forecast, 2.3% previous
  • U.K. ILO Unemployment Rate: 4.9% vs. 4.9% forecast/previous
  • U.K. Claimant Count Change: 700 vs. 3.2K forecast, 7.1K previous

Wonky price action during the morning London session, but oil moves and risk aversion sentiment was able to give us some direction in the currency markets.

Major Events/Reports:

U.K. unemployment data – The latest data from the Office for National Statistics on the U.K.’s employment situation shows that the unemployment rate stayed at an 11-year low of 4.9%. It also shows an employment rate of 74.5% and that the average weekly earnings grew by 2.3% in nominal terms.  Overall, the data shows that Brexit’s affect was barely felt at all in the employment market, likely the reason we saw a bump higher in Sterling after the release.

Oil rises – Oil popped higher ahead of today’s EIA crude inventories release, forecasting a decline in inventories, also likely on optimism that the OPEC deal to reduce surplus will become a reality.  We also got word that China’s crude output remains at its lowest levels in years, adding only 0.3% in the last month. This seems to have lifted the Canadian dollar higher, bouncing back after taking a hit in Asian trade.

Signs of risk aversion – European equity indices have taken a slight tumble after yesterday’s positive session, possibly on concerns sparked by China’s Q3 GDP report, especially the miss in industrial production (6.1% vs. 6.4% expected).

  • The pan-European FTSEurofirst 300 was down by 0.91% to 1,350.05
  • The blue-chip Euro Stoxx 50 was down by 0.02% to 3,046.30
  • Germany’s DAX was down by 0.11% to 10,620.23
  • The U.K.’s FTSE 100 was down 0.11% to 6,987.00

U.S. equity futures have barely made a move and mixed:

  • S&P 500 futures were up by 0.08% to 2,13.75
  • Nasdaq futures ticked lower by -0.02% to 4,826.25

Crude oil recovers – oil pops higher after a busy morning of news reports and data

  • U.S. crude oil was up by 1.31% to $50.95 per barrel
  • Brent blend crude oil was up by 1.26% to $52.33 per barrel

Major Market Movers:

JPY – Sentiment in the Japanese yen continued from Asia to London trade as it maintained its strength:

USD/JPY was down by 52 pips (-0.51%) to 103.33, EUR/JPY was down by 58 pips (-0.51%) to 113.45, GBP/JPY was down by 67 pips (-0.53%) to 127.00

CAD – The Canadian dollar saw a bounce from its Asia session weakness, likely boosted by the gains we saw in the oil markets during the London morning session:

USD/CAD was down 0.31% to 1.3086 from its Asia session high (1.3128), EUR/CAD was down -0.41% to 1.4363 from its Asia session high (1.4421), AUD/CAD was down -0.22% to 1.0042 from its Asia session high (1.0067)

GBP – The British pound continues to feel the pressure across the board, losing its Asia session gains to bring it near session breakeven levels

GBP/USD was down 4 pips (-0.03%) to 1.2289, GBP/AUD was down 25 pips (-0.14%) to 1.6009, EUR/GBP was up 5 pips (0.06%) to .8930

Watch Out For:

  • 12:30 pm GMT: U.S. Building Permits (1.17M expected, 1.15M previous)
  • 12:30 pm GMT: U.S. Housing Starts (1.18M expected, 1.14M previous)
  • 2:00 pm GMT: Bank of Canada Interest Rate Decision (0.5% expected/previous)
  • 3:00 pm GMT: Bank of Canada Monetary Policy Report & Press Conference
  • 3:30 pm GMT: EIA Crude Oil Inventories (2.75M expected, 4.9M previous)
  • 6:00 pm GMT: Federal Reserve Beige Book

See also:

Asian Session Forex Recap

U.S. Session Recap

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