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Before the morning London session, the forex market looked like it was giving back some of the risk aversion moves from last week, most likely on news that China showed exports and imports picking up in today’s trade balance numbers.  EUR/USD bounced from an Asia session low of around 1.2610 to hit 1.2690, USD/JPY bounce from a session low of around 95.60 to 95.98.

Unfortunately for those currency traders looking for an extended bounce into European trade, it looks like the give back ended at the London open. While forex volatility did slow a bit, it looks like European traders took the bounce as an opportunity to continue to play the “weakening global growth” sentiment by getting back into safe haven trades and sell off risk assets like higher-yielding currencies.

Euro pairs seem to be holding onto their gains at the moment (possibly due to the positive German WPI data released earlier), and the Aussie is also holding up well as it tends to whenever China’s data gives us some positive news.  We also saw news today that Australia will offer new notes with a maturity date of April 2037, which could be attractive to investors if we move towards a risk-off environment.

With the exception of the euro and Aussie, most Japanese yen and Swiss franc are moving back to the downside at the moment, and with an empty forex calendar for the rest of the Monday session (due to the bank holidays in the U.S. and Canada), technicals and broad risk sentiment will most likely be the main influence on currency price action until the U.S. session close. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together. In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis. Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!