London Session Forex Recap – Oct. 25, 2016

  • French INSEE Manufacturing Confidence: 102 vs. 103 forecast/previous
  • German IFO Expectations: 106.1 vs. 104.5 forecast/previous
  • German IFO Business Climate: 110.5 vs. 109.6 forecast, 109.5 previous
  • German IFO Current Conditions: 115 vs. 114.9 forecast, 114.7 previous

Mixed reaction to positive German business sentiment and a spike in the Swiss franc highlight currency price action in today’s morning London session.

Major Events/Reports:

Business conditions in Germany continue to improve – Positive surprise for the euro this morning as its largest economy, Germany, signaled optimism among sector executives. The Ifo economic insititute’s business climate index (a survey of around 7,000 firms) rose from 109.5 in September to 110.5 in October, and above the 109.6 forecast.

Also on the positive euro front is news that Greece gets another €2.8B in loans from the Eurozone fund as they continue to show signs of progress to reform their economy.  In the ESM Board of Director’s press release, they cited that the Greek government has “completed key milestones in the area of pension reform, bank governance, the energy sector, and revenue collection.”

Swiss National Bank commentary – The Swiss franc took a hit in the morning London session, likely on commentary from SNB board member Fritz Zurbrugg on monetary policy, most notably that there is no fixed limit on their balance sheet. Leaving the door open for easier policy sent the franc tumbling, which is likely to the delight of the SNB as they still consider it significantly overvalued.

Risk-on sentiment once again – Market players continue to be in risk buying mode after German’s positive business, and likely on the big rise in the metals today, a potential signal of improving global conditions.

  • The pan-European FTSEurofirst 300 was up by 0.24% to 1,361.72
  • The blue-chip Euro Stoxx 50 was up by 0.91% to 3,105.55
  • The U.K.’s FTSE 100 was up 0.46% to 7,018.57
  • The DAX was up by 0.32% to 10,794.77

The risk-on sentiment was felt once again in the U.S. futures market, but volatility is a bit subdued, likely the calm before the storm of a slew of earnings reports.

  • S&P 500 futures was up by 0.07% to 2,145.75
  • Nasdaq futures was up by 0.13% to 4,909.00

Oil ticks higher – Oil is having a better day, seesawing on the uncertainty of a production cut from OPEC and how a production cut can be implemented if agreed upon.

  • U.S. WTI crude oil was up by 0.55% to $50.82 per barrel.
  • Brent blend crude oil was up by 0.39% to $51.66 per barrel.

Major Market Movers:

EUR – mixed on the session thanks to positive German news and a rise in commodities:

EUR/AUD was down 80 pips (-0.55%) to 1.4216, EUR/USD was down 9 pips (-0.09%) to 1.0870, EUR/GBP was up 12 pips (+0.15%) to .8900

CHF – the Swiss franc spiked lower on SNB comments but seems to have recovered a bit heading into U.S. trade:

EUR/CHF was up 37 pips (+0.35%) to 1.0846, USD/CHF was up 44 pips (+0.45%) to .9978, GBP/CHF was up 28 pips (+0.22%) to 1.2183

JPY – Japanese yen couldn’t bounce back from the Asia session beating to stay down on the Tuesday session:

USD/JPY was up 36 pips (+0.35%) to 104.54, NZD/JPY was up 39 pips (+0.52%) to 74.74, AUD/JPY was up 61 pips (+0.78%) to 79.90

Watch Out For:

  • 13:00 pm GMT: U.S. S&P Case-Shiller Home Price Index y/y (5.05% forecast, 5.02% previous)
  • 13:00 pm GMT: U.S. FHFA House Price Index m/m (0.5% forecast/previous)
  • 14:00 pm GMT: U.S. CB Consumer Confidence Index (101.0 forecast, 104.1 previous)
  • 14:00 pm GMT: U.S IBD Consumer Optimism (47.5 forecast, 46.7 previous)

See also:

Asian Session Forex Recap

U.S. Session Recap

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!