London Session Forex Recap – Nov. 11, 2016

  • German final HICP m/m: unchanged at 0.2% as expected
  • German final HICP y/y: unchanged at 0.7% as expected
  • U.K. construction output m/m: 0.3% vs. -0.4% expected, 0.2% previous
  • U.K. construction output y/y: 0.2% vs. 0.0% expected, -1.5% previous
  • German WPI m/m: 0.4% vs. 0.2% expected, 0.4% previous

Today was another data-light day, with some European markets closed for Armistice or Veterans day to boot. Price action was therefore relatively more subdued and choppy. There were movements, though, with risk sentiment apparently being the main driver yet again.

Major Events/Reports:

Risk-taking no longer great – After intense risk-taking pushed most European equities higher, fueled by euphoria over Trump’s victory, those same European equities tried to stage another rally. However, the bulls quickly ran out of steam and got trounced by the bears, pushing them into the red.

  • The pan-European FTSEurofirst 300 was down by 0.20% to 1,337.16
  • The blue-chip Euro Stoxx 50 was down by 0.25% to 3,041.00
  • The U.K.’s FTSE 100 was down by 1.11% to 6,752.10

U.S. equity futures also felt some pain.

  • S&P 500 futures were down by 0.33% to 2,160.00
  • Nasdaq futures were down by 0.82% to 4,705.00

Some market analysts blamed the returning risk-off vibes to the market sobering up after the initial bullish party, as investors take into account possible hindrances to Trump’s plans. Of course, it’s also possible that we’re just seeing some profit-taking in order to avoid weekend risk.

Oil dives lower – Oil benchmarks were already showing weakness when the morning London session rolled around. That’s not the end of it, though, since oil benchmarks ended up extending their losses during the course of the session.

  • U.S. crude oil was down by 1.34% to $44.06 per barrel
  • Brent crude oil was down by 1.18% to $45.30 per barrel

Market analysts attributed the slide in oil prices during the session to reports that OPEC increased its oil output to a record high of 33.64 million barrels per day in October. This exceeds September’s reading by 240,000 barrels per day.

ECB’s Coeure speaks – ECB Executive Board member Benoit Coeure was interviewed earlier, and he was asked about his views on Trump’s victory and whether it would affect the ECB’s decision making process. Coeure replied that “It is too early to say.”

He then repeated the ECB’s line, saying that “the ECB’s monetary policy will remain very accommodative until inflation is firmly on a path towards 2%.”

Major Market Movers:

JPY – The risk-off vibes likely sent safe-havens flows towards the Japanese yen, since the yen got some loving during the session.

USD/JPY was down by 26 pips (-0.25%) to 106.42, CHF/JPY was down by 22 pips (-0.21%) to 107.97, EUR/JPY was down by 63 pips (-0.55%) to 115.71

NZD – The aversion to risk may have been great for the safe-haven yen, but it wasn’t so great for the higher-yielders, particularly the Kiwi, since the Kiwi ended up as the worst-performing currency of the session.

NZD/USD was down by 10 pips (-0.15%) to 0.7185, NZD/JPY was down by 31 pips (-0.40%) to 76.46, NZD/CHF was down by 15 pips (-0.21%) to 0.7080

CAD – Retreating oil prices meant that the Loonie was in retreat as well. The Loonie managed to win out against the Kiwi, though, so the Looie only ended up being the second-weakest currency of the session.

USD/CAD was up by 5 pips (+0.04%) to 1.3501, GBP/CAD was up by 74 pips (+0.44%) to 1.7040, AUD/CAD was up by 3 pips (+0.03%) to 1.0260

Watch Out For:

  • 2:00 pm GMT: U.S. Fed Governor Stanley Fischer has a speech
  • 3:00 pm GMT: University of Michigan preliminary U.S. consumer sentiment (87.9 expected, 87.2 previous)
  • 3:50 pm GMT: BOC Governor Stephen Poloz is scheduled to speak
  • Remembrance Day (or Veterans Day) Holiday in Canada and the U.S. of A. today

See also:

Asian Session Forex Recap

U.S. Session Recap

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