London Session Forex Recap – Nov. 7, 2016

  • Swiss CPI m/m: 0.1% vs. 0.2% expected. 0.1% previous
  • Swiss CPI y/y: -0.2% as expected, same as previous
  • U.K. Halifax HPI m/m: 1.4% vs. 0.2% expected, 0.3% previous
  • U.K. Halifax HPI y/y: 5.2% vs. 4.8% expected, 5.8% previous
  • Euro Zone retail PMI: 48.6 vs. 49.6 previous
  • Euro Zone Sentix indicator: 13.1 vs. 8.9 expected, 8.5 previous
  • Euro Zone retail trade m/m: -0.2% vs. -0.3% expected., -0.2% previous

Price action was rather choppy during today’s morning London session. However, profit-taking now appears to be the name of the game in the forex market, as the higher-yielders and the Greenback gave back earlier gains while safe-havens found some support despite the prevalence of risk-appetite in other markets.

Major Events/Reports:

SNB ready to interveneIn an interview earlier, SNB Governing Board member Andrea Maechler said that “just like with the Brexit vote, we [the SNB] are ready.”

She also had this to say with regard to intervention:

“My team is prepared and the Swiss National Bank will be there, if necessary, to intervene to stabilize the currency markets.”

ECB has no plans to taper QE – Luigi Signorini was asked about the ECB’s plans on tapering QE during his testimony before Parliament earlier. And Signorini answered by saying that “There is no prospect of this … The question is how much to extend the limits that were given.” Luigi Signorini is a Deputy Governor and a Member of the Italian Central Bank’s Governing Board.

Super risk-on session – There was risk-taking aplenty during Monday’s morning London session, with most of the major European equity indices in the green.

  • The pan-European FTSEurofirst 300 was up by 1.40% to 1,314.48
  • The blue-chip Euro Stoxx 50 was up by 1.54% to 3,002.00
  • Germany’s DAX was up by 1.52% to 10,415.50
  • The U.K.’s FTSE 100 was up by 1.37% to 6,784.70

U.S. equity futures, meanwhile, were also well in the green, signaling a potentially risk-on U.S. session.

  • S&P 500 futures were up by 1.30% to 2,107.00
  • Nasdaq futures were up by 1.49% to 4,727.00

Market analysts were pretty uniform in attributing the risk-friendly environment to the FBI Director James Comey’s announcement over the weekend. To be more specific, Comey cleared Hillary Clinton yet again, saying that:

“Based on our review, we have not changed our conclusions that we expressed in July with respect to Secretary Clinton”

Quite naturally, market players breathed a sigh of relief as expectations grew that Clinton would be able to recover lost ground.

Most commodities surge higherMost commodities were on a tear during the morning London session.

Oil benchmarks were doing very well.

  • U.S. crude oil was up by 1.45% to $44.71 per barrel
  • Brent crude oil was up by 1.18% to $46.12 per barrel

Likewise, base metals were in positive territory.

  • Copper was up by 0.97% to $2.287 per pound
  • Nickel was up by 4.89% to $10,950.00 per dry metric ton

Precious metals were going against the bullish tide, however, probably because of the risk-on vibes.

  • Gold was down by 1.38% to $1,286.55 per troy ounce
  • Silver was down by 2.48% to $18.148 per troy ounce

Base metals were climbing higher because of Chinese demand, market analysts say. The rise in oil prices, meanwhile, was attributed to a statement by OPEC Secretary General Mohammed Barkindo, wherein he assured the market that OPEC members “remain committed to the implementation” of a planned oil production cut.

Major Market Movers:

CHF – After showing weakness during the Asian session, the Swissy just shrugged off both the risk-on vibes, as well as the SNB’s threat that it was ready to intervene in the markets.

USD/CHF was down by 24 pips (-0.25%) to 0.9750, AUD/CHF was down by 22 pips (-0.20%) to 0.7488, EUR/CHF was down by 23 pips (-0.22%) to 1.0785

USD – The Greenback was the strongest currency during the earlier Asian session, thanks to FBI Director Comey’s announcement. However, the Greenback ended up as the weakest currency of the morning London session. There were no apparent catalysts for the Greenback’s demand. Although it’s probable that we’re just seeing some profit-taking after the Greenback’s rise earlier and ahead of the U.S. elections.

NZD/USD was up by 18 pips (+0.26%) to 0.7316, GBP/USD was up by 16 pips (+0.13%) to 1.2423, EUR/USD was up by 4 pips (+0.04%) to 1.1062

Watch Out For:

  • 3:00 pm GMT: U.S. Fed labor market conditions index (-2.2 previous)
  • 8:00 pm GMT: U.S. consumer credit ($17.50B expected, $25.87B previous)

See also:

Asian Session Forex Recap

Last Week’s Top Forex Movers

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