London Session Forex Recap – Nov. 10, 2016

  • French industrial production m/m: -1.1% vs. -0.3% expected, 2.3% previous
  • French industrial production y/y: -1.1% vs. 0.4% expected, 0.5% previous
  • Italian industrial production m/m: -0.8% vs. -1.0% expected, 1.8% previous
  • Italian industrial production y/y: 1.8% vs. 2.2% expected, 4.4% previous

Only low-tier items were on the docket for today’s morning London session, so price action was a bit choppy on some pairs. There was directional movement, though, and forex traders seemed like they were turning mainly to risk sentiment and commodities for direction.

Major Events/Reports:

Metals rise, oil falls – Most commodities, particularly metals, were in full rally mode during the session. Oil was a very noticeable exception, though, since it retreated instead.

Base metals were in very high demand.

  • Copper was up by 4.25% to $2.564 per pound
  • Nickel was up by 0.90% to $10,950.00 per dry metric ton

Precious metals were also bought up, despite the risk-on vibes in other markets.

  • Gold was up by 0.69% to $1,282.35 per troy ounce
  • Silver was up by 1.48% to $18.650 per troy ounce

As mentioned earlier, oil benchmarks were not doing too well.

  • U.S. crude oil was down by 0.88% to $44.87 per barrel
  • Brent crude oil was down by 0.30% to $46.2 per barrel

The broad-based commodities rally was attributed by some market analysts to speculation that Trump’s plans for America would require lot of commodities, particularly industrial or base metals.

Oil’s slide, meanwhile, came about after the International Energy Agency released a report which projected that global markets would be, as Reuters puts it, “awash with oil in 2017” if OPEC does not push through with its planned oil production cut.

Make risk-taking great again! – After plunging hard and recovering even harder in the Aftermath of Trump’s victory yesterday, European equities printed further gains during today’s morning London session.

  • The pan-European FTSEurofirst 300 was up by 0.45% to 1,349.66
  • The blue-chip Euro Stoxx 50 was up by 0.78% to 3,077.00
  • Germany’s DAX was up by 0.41% to 10,689.50

U.S. equity futures were also in positive territory.

  • S&P 500 futures were up by 0.42% to 2,169.25
  • Nasdaq futures were up by 0.59% to 4,849.00

Market analysts attributed the risk-on vibes to stronger demand for banking and mining shares, which then improved overall risk appetite. Demand for banking shares was apparently because of expectations that Trump would lessen regulations on banks. Demand for mining shares, meanwhile, was obviously due to the commodities rally that I talked about earlier.

Major Market Movers:

USD – The Greenback continued to reign supreme during the session. There were no apparent catalysts, but it’s probably safe to say that we’re just seeing continued Greenback demand after Trump’s victory yesterday, as investors look forward with optimism on potential effects of The Donald’s economic policies.

USD/JPY was up by 113 pips (+1.07%) to 106.75, USD/CHF was up by 36 pips (+0.37%) to 0.9877, USD/CAD was up by 81 pips (+0.71%) to 1.3471

JPY – The prevalence of risk appetite during the morning London session is likely the reason why the yen got whipped. The yen got whipped so bad that it ended up as the weakest currency of the session.

EUR/JPY was up by 83 pips (+0.72%) to 116.27, GBP/JPY was up by 124 pips (+0.97%) to 132.58, CHF/JPY was up by 76 pips (+0.71%) to 108.05

AUD & NZD – The higher-yielding Aussie and Kiwi were both showing strength for most of the session’s duration, likely because of the risk-friendly environment and the commodities rally. They both got slammed by sellers near the end of the session, though. Unfortunately, there was no apparent catalysts for the sudden weakness.

AUD/USD was down by 52 pips (-0.68%) to 0.7636 with 0.7741 as session high, AUD/JPY was up by 31 pips (+0.39%) to 81.50 with 82.45 as session high, AUD/CAD was down by 7 pips (-0.07%) to 1.0285 with 1.0397 as session high

NZD/USD was down by 64 pips (-0.89%) to 0.7206 with 0.7307 as session high, NZD/CAD was down by 26 pips (-0.27%) to 0.9710 with 0.9786 as session high, NZD/JPY was up by 15 pips (+0.20%) to 76.95 with 77.51 as session high

Watch Out For:

  • 1:30 pm GMT: Canada’s NHPI (0.2% expected, same as previous)
  • 1:30 pm GMT: U.S. initial jobless claims (260K expected, 265K previous)
  • 2:15 pm GMT: St. Louis Fed President James Bullard has a speech
  • 7:00 pm GMT: U.S. Federal budget (-$81.9B expected, $33.4B previous)
  • 9:30 pm GMT: Business New Zealand’s manufacturing index (57.7 previous)
  • 9:45 pm GMT: New Zealand’s FPI (-0.9% previous)

See also:

Asian Session Forex Recap

U.S. Session Recap

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