Article Highlights

  • Euro Zone trade balance: €21.0B vs. €22.0B expected, €22.6B previous
  • ECB President Draghi will testify later
  • Presidents’ Day bank holiday in the U.S.A. today
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Not much on the docket for today’s morning London forex session, so risk-sentiment was once again in play. The risk-taking that greatly boosted other markets wasn’t as rampant in the forex market, however, since forex price action wasn’t as explosive.

Major Events:

Oil rally sustained (for now) – Oil was on the rise during the session, with U.S. crude oil up by 1.99% to $30.02 per barrel and Brent crude oil up by 1.33% to $33.81 per barrel after both benchmarks dipped slightly into the red during the late Asian session.

The bullish push was apparently being fueled (hah!) by continued speculation that OPEC members may agree to jointly cut back on oil production, according to some analysts. Market players also apparently just shrugged off earlier reports that Standard Chartered downgraded its forecast for Brent crude. But then again, Standard Chartered is still expecting Brent crude oil to climb to $50 per barrel by the end of 2016 (%63 previous).

Super Risk-On Session (in other markets) – There was rampant risk-taking during the trading session, with the pan-European FTSEurofirst 300 surging by 3.08% to 1,270.00 and the DAX up by a very solid 2.98% to 9,234.30.

U.S. equity future were also comfortably in the green, with the Nasdaq futures up by 2.02% to 4,087.38 and the S&P 500 futures up by 1.60% to 1,888.00. And gold, which is the traditional go-to asset during times of risk aversion, was down by 2.36% to $1,210.10 per troy ounce during the session.

Market analysts attribute the risk-on sentiment to a stronger Chinese yuan for the day and rising oil prices. However, all this happiness and rainbows stuff didn’t affect the forex market as much since price action was rather subdued.

Major Currency Movers:

GBP – The pound was the weakest currency of them all. Heck, it was even slightly losing out to the safe-havens, which is rather strange since there were no direct catalysts for the pound’s overall weakness. Moreover, the risk-on sentiment should have enticed forex traders to load up on the higher-yielding pound.

Thinking about it, it’s possible that forex traders were not too keen to load up on the pound because of the top-tier U.K. economic reports lined-up for the week. It’s also possible that Brexit fears were in play, especially since the EU Summit this coming February 18-19 will be focused on ironing out an anti-Bexit deal.

GBP/USD was down by 48 pips (-0.33%) to 1.4465, GBP/NZD was down by 60 pips (-0.28%) to 2.1690, GBP/AUD was down by 71 pips (-0.33%) to 2.0210

EUR – Capital flows away from the lower-yielding euro towards higher-yielding assets, namely European equities, caused the euro to lose out against most of its forex rivals.

EUR/USD was down by 29 pips (-0.25%) to 1.1180, EUR/AUD was down by 42 pips (-0.27%) to 1.5620, EUR/NZD was down by 37 pips (-0.22%) to 1.6763

AUD – The prevailing risk-on sentiment naturally meant that the comdolls were feeling the love from forex traders. And the Aussie was apparently the comdoll of choice for most forex traders since it was able to win out against its fellow comdolls. Interestingly enough, rising oil prices didn’t translate to a ton of buyers for the Loonie, so much so that it was the weakest among the comdolls.

AUD/CHF was up by 24 pips (+0.34%) to 0.7048, AUD/NZD was up by 12 pips (+0.11%) to 1.0735, AUD/CAD was up by 11 pips (+0.11%) to 0.9895

Watch Out For:

  • Presidents’ Day bank holiday in the U.S.A. today
  • 2:00 pm GMT: ECB President Super Mario Draghi will testify before the Economic and Monetary Affairs Committee
  • 9:45 pm GMT: Headline (1.5% expected, 1.6% previous) and core (1.1% expected, 1.0% previous) readings for New Zealand’s retail sales volume

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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