London Session Forex Recap – Oct. 31, 2016

  • German Retail Sales m/m: -1.4% vs. 0.2% forecast, -0.3% previous
  • U.K. M4 Money Supply m/m: -0.4% vs. 1.0% previous
  • U.K. Net Consumer Credit: £1.4B vs. £1.5B forecast, £1.6B previous
  • U.K. Mortgage Approvals: 62.9K vs. 61.5K forecast, 61K previous
  • Euro Area GDP q/q: 0.3% vs. 0.3% forecast/previous
  • Euro Area Flash HICP: 0.5% vs. 0.5% forecast, 0.4% previous
  • Euro Area Flash core HICP: 0.8% vs. 0.8% forecast/previous

Wonky price action to start the week thanks to U.K. and Euro Area data, oil sentiment, and uncertainty rising with the U.S. Presidential election.

Major Events/Reports:

Euro Area GDP & Inflation data – No surprise from Europe this morning as the preliminary third quarter GDP reading came in at 0.3% on a quarterly basis, and at a 1.6% growth rate on a yearly basis. This is pretty much in line with growth rates we’ve seen for the past four years, so it’s no surprise there wasn’t much of a reaction to speak of in the euro.

We also got the latest read on inflation in the Euro Area from Eurostat, showing a rise by 0.5% on an annualized basis, a tick above the 0.4% read in September. It looks like energy inflation helped the move higher as it was less negative (-0.9% vs. -3.0% Sept.), but we did see a dip lower in unprocessed food inflation (0.2% vs. 1.1% Sept.)

Overall, we’re seeing slight improvement, but they’re not good by any stretch of the imagination, at least not enough for the European Central Bank to end quantitative easing any time soon.

U.K. Banking data  – We also got data from the Bank of England giving us an update on money and lending conditions in the U.K.  It was a mixed bag as net lending to consumers came in below both expectations and previous reads at £1.4B, but mortgage approvals rose to a three month high at just under 63,000 loans in September, above a revised 61K in August.

Risk appetite is off to start the week – it looks like European markets, possibly on uncertainty of U.S. elections after Hillary Clinton email investigation re-0pened:

  • The pan-European FTSEurofirst 300 was down by -0.38% to 1,340.86
  • The blue-chip Euro Stoxx 50 was down by -0.48% to 3,064.35
  • Germany’s DAX was down by -0.23% to 10,671.28
  • The U.K.’s FTSE 100 was down by -0.42% to 6,967.00

But the risk-off sentiment doesn’t seem to faze U.S. traders as futures are ticking higher ahead of the U.S. equity markets open:

  • S&P 500 futures was up by 0.15% to 2,127.00
  • Nasdaq 100 futures was by 0.31% to 4,820.75

Oil is on the move lower – without an agreement coming out of this weekend’s OPEC meeting to cut, and without a commitment from non-OPEC producers to cut until OPEC gets it together, oil futures took a turn to the downside in London trade:

  • U.S. crude oil was down by -0.55% to $48.43 per barrel
  • Brent blend crude oil was down by -0.34% to $49.37 per barrel

Major Market Movers:

GBP – The British pound continued the Asia sentiment weakness in morning London trade, despite positive mortgage approvals data:

GBP/USD was down by 22 (-0.18%) to 1.2163, GBP/JPY was down 27 pips (-0.21%) to 127.74, EUR/GBP was up 50 pips (+0.56%) to .9001

EUR – The euro is mostly lower on the session after an underwhelming set of GDP and inflation data

EUR/USD was down 32 pips (-0.29%) to 1.949, EUR/GBP was down 26 pips (-0.24%) to .9004, EUR/AUD was down 60 pips (-0.42%) to 1.4391

CAD – After a surprising rally in the Asia session despite oil weakness, the Loonie seems to be holding steady its gains against the majors

EUR/CAD was down 44 pips (-0.30%) to 1.4663, CAD/JPY was up 28 pips (+0.37%) to 78.42, NZD/CAD was down 10 pips (-0.10%) to .9578

Watch Out For:

  • 12:30 pm GMT: U.S. Personal Spending (0.4% forecast, 0.2% previous)
  • 12:30 pm GMT: U.S. Personal Incom3 (0.4% forecast, 0.2% previous)
  • 12:30 pm GMT: U.S. Core PCE Index (0.1% forecast, 0.2% previous)
  • 13:30 pm GMT: Canada Industrial Product Price Index (0.4% forecast, -0.5% previous)
  • 13:30 pm GMT: Canada Raw Materials Price Index (0.5% forecast, -0.7% previous)
  • 13:45 pm GMT: U.S. Chicago PMI (54 forecast, 54.2 previous)

Last Week’s Top Forex Movers

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

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