London Session Forex Recap – Nov. 21, 2016

  • No economic reports were released during the session
  • Fed Governor Stanley Fischer is about to give a speech

The forex calendar was rather sparse during Monday’s morning London session, so forex traders turned mainly to risk sentiment and commodities for direction. And since risk-taking prevailed and commodities staged a rally, both the higher-yielding Kiwi and Aussie got a lot of love from traders. One currency was able to win out against the two comdolls, though.

Major Events/Reports:

British PM May speaks – British Prime Minister Theresa May gave a speech to the CBI earlier. And the PM shared some of her planned fiscal policies to support businesses, which includes her plans to cut corporate taxes from 20% to 17%, or maybe even lower, as hinted at in her speech.

“Now we want to go further, and look at how we can make our support even more effective – because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also a tax system that is profoundly pro-innovation.”

May also said that her government will spend an extra £2 billion per year on R&D in order to “help put post-Brexit Britain at the cutting edge of science and tech.”

And with regard to Brexit, May said that she will stand by her promise to trigger Article 50 of the TEU by March 2017. According to May, triggering Article 50 A.S.A.P. would be good for businesses and individual Britons because “they can plan with certainty” in a post-Brexit world.

Commodities rally really hard – Most commodities were in full rally mode during the morning London session.

Precious metals just shrugged off the risk-on mood and climbed higher.

  • Gold was up by 0.61% to $1,216.10 per troy ounce
  • Silver was up by 0.32% to $16.678 per troy ounce

Base metals were in really high demand.

  • Copper was up by 1.97% to $2.516 per pound
  • Nickel was up by 2.18% to $ 11,140.00 per dry metric ton

Oil benchmarks, meanwhile, were also well in the green.

  • U.S. crude oil was up by 1.81% to $47.20 per barrel
  • Brent crude oil was up by 1.86% to $47.73 per barrel

The broad-based commodities rally was likely underpinned by the Greenback’s weakness, with the U.S. dollar index down by 0.36% to 101.04 for the day.

As for specific reports for each commodity, market analysts pointed to higher demand for base metals, especially copper, although that’s also somewhat linked to the Greenback’s weakness. After all, globally-traded commodities that are prices in Greenbacks become relatively cheaper when the Greenback slides.

Getting back on topic, demand for oil was due to renewed optimism that OPEC would be able to hammer out a deal to cut oil production, especially after Russia’s Putin said over the weekend that Russia is open to such a deal.

A little risk-taking to start the week – Europe is starting the week with some optimism, which sent the major European equity indices higher.

  • The pan-European FTSEurofirst 300 was up by 0.21% to 1,340.76
  • The blue-chip Euro Stoxx 50 was up by 0.32% to 3,034.00
  • Germany’s DAX was up by 0.38% to 10,705.50
  • The U.K.’s FTSE 100 was up by 0.38% to 6,800.70

Even U.S. equity futures got a bullish boost.

  • S&P 500 futures were up by 0.21% to 2,185.25
  • Nasdaq futures were up by 0.24% to 4,820.12

Market analysts pointed out that oil and mining shares were leading the way. The prevalence of risk appetite during the session was therefore likely due to the commodities rally.

Major Market Movers:

AUD & NZD – The risk-friendly environment and commodities rally stoked demand for the higher-yielding Kiwi and Aussie. The two comdolls were not the top dogs, though.

AUD/USD was up by 22 pips (+0.31%) to 0.7370, AUD/CAD was up by 33 pips (+0.34%) to 0.9917, AUD/CHF was up by 27 pips (+0.38%) to 0.7438

NZD/USD was up by 21 pips (+0.31%) to 0.7046, NZD/CAD was up by 31 pips (+0.33%) to 0.9482, NZD/CHF was up by 25 pips (+0.37%) to 0.7116

GBP – The pound was the one currency to rule them all during today’s morning London session. Interestingly enough, the pound had a mixed performance for most of the session. Demand for the pound began to noticeably pick up after British PM May’s speech, however.

GBP/USD was up by 50 pips (+0.40%) to 1.2397, GBP/CAD was up by 70 pips (+0.42%) to 1.6682, GBP/CHF was up by 56 pips (+0.45%) to 1.2510

CHF – The Swissy was down in the dumps, likely because the risk-on mood meant little demand for the safe-haven currency.

USD/CHF was up by 6 pips (+0.06%) to 1.0092, CAD/CHF was up by 4 pips (+0.04%) to 0.7499, EUR/CHF was up by 7 pips (+0.06%) to 1.0730

Watch Out For:

  • 1:00 pm GMT: Fed Governor Stanley Fischer has a speech
  • 1:30 pm GMT: Canadian wholesale sales (0.5% expected, 0.8% previous)
  • 2:00 pm GMT: CB Chinese leading index (1.1% previous)
  • 3:30 pm GMT: CB Australian leading index (0.0% previous)
  • 4:00 pm GMT: ECB President Mario Draghi will testify before the European Parliament
  • 9:45 pm GMT: New Zealand’s visitor arrivals (3.6% previous)

See also:

Asian Session Recap

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