Article Highlights

  • French final Q4 GDP q/q: revised higher to 0.3% vs. steady at 0.2% expected
  • French final Q4 GDP y/y: revised higher to 1.4% vs. steady at 1.3% expected
  • French flash HICP m/m: 0.3% vs. 0.4% expected, -1.0% previous
  • French flash HICP y/y: -0.1% vs. 0.1% expected, 0.3% previous
  • Spanish flash HICP m/m: -0.4% vs. -2.5% previous
  • Spanish flash HICP y/y: -0.9% vs. -0.6% expected, -0.4% previous
  • Euro Zone economic sentiment: 103.8 vs. 104.3 expected, 106.7 previous
  • Euro Zone industrial sentiment: -4.4 vs. -3.6 expected, -3.1 previous
  • Euro Zone consumer sentiment: unchanged at -8.8
  • German flash HICP m/m: 0.4% vs. 0.6% expected, -1.0% previous
  • German flash HICP y/y: -0.2% vs. 0.1% expected, 0.4% previous
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Price action was rather wonky during today’s morning London forex session, but there was enough volatility and directional movement to keep the trading session interesting.

Major Events:

Mostly disappointing euro zone reports – The euro zone hot slammed with a slew of mostly disappointing reports during the morning London session. France’s preliminary inflation readings set the tone by failing to meet expectations for both the monthly (0.3% vs. 0.4% expected, -1.0% previous) and annual readings (-0.1% vs. 0.1% expected, 0.3% previous).

Spain followed suit, printing another round of negative inflation numbers. After that, we got a bunch of disappointing business and consumer survey results from the European Commission before we got Germany’s likewise disappointing inflation numbers much later.

Commodities in rally mode – There was a broad-based commodities rally during the morning London session, and base metals were leading the way, with copper up by 2.01% to $2.108. Oil was also a major driver of the commodities rally, thanks to renewed optimism over an OPEC deal and strong demand for gasoline in the U.S., according to some analysts. However, other analysts say this was due to short covering on Brent future contracts.

In any case, U.S. crude oil was up by 1.12% to $33.44 per barrel while Brent crude oil was up by 1.25% to $35.73 per barrel during the morning London session.

Risk appetite is here to stay – European market players were in a joyful mood during the morning London session since the Pan-European FTSEurofirst 300 was up by 1.12% to 1,298.91 while the DAX was up by 1.30% to 9,452.50.

U.S. equity futures were also showing signs of risk-taking since the S&P 500 futures was up by 0.51% to 1,960.50 while the Nasdaq futures was up by 0.63% to 4,271.12 during the morning London session. The safe-haven gold, meanwhile, was only down by 0.12%, probably because it was being supported by the broad commodities rally.

Speaking of the commodities rally, that was probably one of the main reasons for the sustained appetite for risk because European mining companies were the main winners during the session. Some analysts were pointing to the optimism over the G20 meeting, though.

Major Currency Movers:

EUR – Most euro pairs ended the morning London session on a weaker note, thanks to the prevailing risk-on sentiment and the barrage of mostly disappointing reports.

EUR/USD was down by 39 pips (-0.36%) to 1.1019, EUR/JPY was down by 36 pips (-0.29%) to 124.44, EUR/GBP was down by 19 pips (-0.25%) to 0.7883

GBP – Forex price action for most pound pairs was a roller coaster ride, rising higher at the start of the session before swiftly swooping down and ending the morning London session mixed. The initial up move was likely due to the risk-on sentiment, but the later reversal didn’t have any apparent catalysts. Perhaps it’s just profit-taking in order to avoid weekend risk. It’s a Friday after all.

GBP/USD was down by 16 pips (-0.12%) to 1.3972 with 1.4042 as session high, GBP/JPY was down by 11 pips (-0.07%) to 157.79 with 158.54 as session high, GBP/CHF was up by 29 pips (+0.22%) to 1.3865 with 1.3922 as session high

USD – The Greenback was just kicking butt and taking names during the morning London forex session. There weren’t any clear drivers for Greenback demand, but it’s possible that forex traders are opening preemptive positions ahead of the upcoming preliminary reading for Q4 2015 U.S. GDP.

USD/CHF was up by 34 pips (+0.35%) to 0.9924, AUD/USD was down by 27 pips (-0.39%) to 0.7203, NZD/USD was down by 32 pips (-0.48%) to 0.6728

AUD & NZD – Despite the commodities rally and risk-on environment, Aussie and Kiwi pairs were grinding lower against most of their forex rivals. One possible catalyst for the weakness was Chinese Premier Li Keqiang’s earlier admission that China’s economic growth was slowing down.

AUD/CAD was down by 29 pips (-0.30%) to 0.9758, AUD/JPY was down by 27 pips (-0.34%) to 81.34

NZD/CHF was down by 10 pips (-0.15%) to 0.6677, NZD/JPY was down by 29 pips (-0.39%) to 76.01

Watch Out For:

  • 1:30 pm GMT: 2nd estimate for Q4 2015 U.S. GDP (0.4% expected, 0.7% previous); Forex Gump has a nifty Forex Trading Guide for this event that you can read here
  • 1:30 pm GMT: U.S. core PCE price index (1.2% expected, 1.2% previous)
  • 1:30 pm GMT: U.S. goods trade balance (-$61.2B expected, -$61,5B previous)
  • 1:30 pm GMT: U.S. personal spending (0.3% expected, 0.0% previous)
  • 1:30 pm GMT: U.S. personal income (0.4% expected, 0.3% previous)
  • 3:00 pm GMT: Final University of Michigan consumer sentiment index (91.0 expected, 90.7 previous)
  • 3:15 pm GMT: Fed Governor Jerome Powell is scheduled to speak
  • 6:30 pm GMT: Fed Governor Lael Brainard will deliver a speech

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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