London Session Forex Recap – Nov. 24, 2016

  • German final GDP q/q: unchanged at 0.2% as expected
  • German final GDP y/y: unchanged at 1.7% as expected
  • French INSEE manufacturing confidence: 103 vs. 102 expected, 103 previous
  • German IFO current conditions: 115.6 vs. 115.0 expected, 110.4 previous
  • German IFO business climate: 110.4 vs. 110.5 expected, 110.4 previous
  • U.K. BBA mortgage approvals: 40.9K vs. 38.8K expected, 38.7K previous
  • GFK’s German consumer climate: vs. 9.8 expected, 9.7 previous
  • Thanksgiving Day in the U.S.A. today

Up down and all around! Price action was both choppy and rather wonky during today’s morning London session. The Loonie noticeably got some broad-based demand, though. The Greenback, meanwhile, suffered a broad-based slide.

Major Events/Reports:

BBA mortgage approvals rise – The monthly report from the British Bankers’ Association (BBA) revealed that the number of mortgage approvals by major banks rose by 40.9K in October. This reading is better than the 38.8K expected, as well as the previous month’s 38.7K.

Moreover, the recent reading is the highest since before the Brexit referendum. The U.K.’s housing market therefore still seems relatively stable (and even improved), despite the Brexit referendum. Mortgage approvals in October were down by 10% year-on-year, though, which is a real bummer.

Most commodities rose, but precious metals fellCommodities got some some love from market players during today’s morning London session.

Base metals were mixed, but mostly in the green.

  • Copper was up by 1.38% to $2.652 per pound
  • Tin was up by 0.43% to $21,370.00 per dry metric ton

Oil benchmarks are off their highs, but managed to end the session with some gains.

  • U.S. crude oil was up by 0.40% to $48.13 per barrel
  • Brent crude oil was up by 0.33% to $49.11 per barrel

Precious metals were a clear exception, however, since they took a trip to negative territory.

  • Gold was down by 0.22% to $1,185.20 per troy ounce
  • Silver was down by 0.45% to $16.277 per troy ounce

Market analysts can’t pinpoint the reason for the broad-based demand. And we can’t exactly point to Greenback weakness, since the USD Index was slightly up by 0.10% to 101.83 for the day.

However, demand for oil was apparently driven by renewed optimism on OPEC’s planned production cut after word got around that Russia is having a meeting with some OPEC members.

Unfortunately, oil benchmarks began sliding lower later. And oil bulls can blame their misfortune to the revelation that Russia will only agree to an oil freeze. You see, part of OPEC’s plans for cutting oil production is to invite non-OPEC producers like Russia to slash oil output by 500K barrels per day. And since Russia is the biggest non-OPEC oil producer, Russia’s refusal to play along throws a very big wrench into OPEC’s plans.

Modest risk-taking – There were modest signs of risk-taking in Europe during the morning London session, since most of the major European equity indices managed to eke out some gains.

  • The pan-European FTSEurofirst 300 was up by 0.08% to 1,345.15
  • The blue-chip Euro Stoxx 50 was up by 0.11% to 3,039.00
  • Germany’s DAX was up by 0.15% to 10,678.50

Market analysts couldn’t point out the reason for the modest yet broad-based appetite for risk. Although they did point out that markets were not as active because of expectations that Wall Street will be gorging on turkey and other food stuffs for Thanksgiving. Also, shares of chemical companies were leading the way.

 Major Market Movers:

CAD – The Loonie had a mixed start but soon got an early boost, likely because of the rise in oil prices during the session. Strangely enough, the Loonie continued moving higher against its peers, even while oil benchmarks began to sound the retreat.

USD/CAD was down by 35 pips (-0.26%) to  1.3492, NZD/CAD was down by 5 pips (-0.05%) to 0.9437, EUR/CAD was up by 15 pips (-0.11%) to 1.4237

USD – The Greenback was the worst-performing currency of the session. There weren’t any apparent catalysts, but given the Greenback’s bullish surge yesterday and Thanksgiving Day in the U.S.A., it’s probable that we’re just seeing some profit-taking.

EUR/USD was up by 16 pips (+0.15%) to 1.0551, GBP/USD was up by 30 pips (+0.24%) to 1.2446, AUD/USD was up by 21 pips (+0.29%) to 0,7390

Watch Out For:

  • 1:30 pm GMT: Canadian quarterly corporate profits (-3.4% previous)
  • 5:15 pm GMT: SNB Governing Board Member Fritz Zurbrügg has a speech
  • 9:45 pm GMT: New Zealand’s trade balance (-$950M expected, -$1,436M previous)
  • Thanksgiving Day in the U.S.A. today

See also:

Asian Session Recap

U.S. Session Recap

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