Article Highlights

  • Euro Zone retail PMI: 50.1 vs. 48.9 expected
  • Italian final Q4 GDP q/q: unrevised at 0.1% as expected
  • Italian final Q4 GDP y/y: unrevised at 1.0% as expected
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Not much on the docket for today’s morning London forex session, so traders turned mainly to risk sentiment and commodities for direction. It’s another NFP Friday, though, so volatility was relatively subdued.

Major Events:

Risk appetite persists – The risk-on sentiment from the earlier Asian session carried into today’s morning London session, with the pan-European FTSEurofirst 300 up by 0.49% to 1,342.11 and the DAX up by 0.94% to 9,846.00 during the session. U.S. equity futures were also slightly in the green, hinting that risk appetite may be the dominant sentiment for the upcoming U.S. session.

Aside from the risk sentiment spillover, market analysts also pointed to positive earnings reports for some European companies as the main catalysts for the upbeat sentiment.

I want my Precious! – Despite the prevalence of risk appetite, the safe-haven gold surged to a one-year high during today’s morning London session, ending the session 0.61% higher to $1,265.90 per troy ounce.

According to analysts, demand for the shiny stuff was being driven by the Greenback’s weakness (gold is denominated in U.S. dollars), which made gold relatively cheap. Other commodities, namely other metals, were also on the bargain list and were being bought up, with silver up by 1.81% to $15.405 and copper up by 1.43% to $2.240.

Round trip for oil – Precious and base metals weren’t the only commodities in the green since oil benchmarks were in positive territory as well, with U.S. crude oil up by 0.78% to $34.84 per barrel and Brent crude oil up by 1.03% to $37.45 per barrel during the morning London session.

Both oil benchmarks were actually in the red earlier on record-high U.S. inventories, but managed to recover (and then some) after an official from the International Energy Agency (IEA) said that investment spending on the oil industry was slashed by more than $100 billion in 2015 and that investment is expected to get trimmed again this year.

NFP Friday! – Today is another NFP Friday, so volatility was naturally subdued ahead of the NFP report. Still, there were a few currencies that were slowly but clearly on the move, which I highlighted below. Oh, if you’re planning to trade the NFP report and you need to get up to speed, then you can read Forex Gump’s Forex Preview for the NFP report here.

Major Currency Movers:

AUD & NZD – The Aussie and the Kiwi were getting some loving from forex traders during the morning London session, thanks to the risk-on sentiment and the commodities rally. The Aussie, in particular, was really strong since it managed to beat all its forex rivals, probably because gold accounts for around 8.1% of Australia’s exports.

AUD/USD was up by 14 pips (+0.20%) to 0.7382, AUD/CAD was up by 23 pips (+0.24%) to 0.9912, AUD/CHF was up by 19 pips (+0.26%) to 0.7333

NZD/USD was up by 8 pips (+0.12%) to 0.6760, NZD/CAD was up by 16 pips (+0.18%) to 0.9078, NZD/CHF was up by 13 pips (+0.20%) to 0.6715

CAD – Oil had a roundtrip during the morning London session, so the Loonie followed suit. However, the Loonie wasn’t able to recover from the initial fall, probably because top-tier reports for Canada are coming up, so forex traders are wary of loading up on the Loonie.

USD/CAD was up by 8 pips (+0.06%) to 1.3428 with 1.3452 as session high, CAD/JPY was down by 14 pips (-0.17%) to 84.69 with 84.49 as session low, CAD/CHF was up by 2 pips (+0.03%) to 0.7396 with 0.7368 as session low

EUR – The euro was the second strongest currency during the morning London session, barely losing out to the Aussie. There weren’t any major catalysts for the euro’s strength, but there were rumors flying about earlier that ECB officials are undecided on how to act for next week’s policy meeting. Perhaps that was the catalysts.

EUR/USD was up by 20 pips (+0.19%) to 1.0971, EUR/CHF was up by 29 pips (+0.27%) to 1.0897, EUR/CAD was up by 34 pips (+0.23%) to 1.4731

Watch Out For:

  • 1:30 pm GMT: U.S. non-farm payrolls (195K expected, 151K previous)
  • 1:30 pm GMT: U.S. jobless rate (expected to hold steady at 4.9%)
  • 1:30 pm GMT: U.S. average hourly earnings (0.2% expected, 0.5% previous)
  • 1:30 pm GMT: U.S. trade balance (-$44.0B0 expected, -$43.36B previous)
  • 1:30 pm GMT: Canadian trade trade (-$0.90B expected, -$0.59B previous)
  • 1:30 pm GMT: Canadian labor productivity (0.1% previous)
  • 1:30 pm GMT: Ivey Canadian PMI (58 expected, 66 previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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