Article Highlights

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After a relatively subdued Asian session, volatility returned to the forex market when the London trading session rolled in. However, forex price action for most pairs was choppy, probably because the forex calendar only had low-tier items on the lineup.

Major Events:

Moderate appetite for risk persists – The moderate risk-taking during the Asian session spilled over into today’s morning London session, with the pan-European FTSEurofirst 300 up by 0.12% to 1,344.77 and the DAX up by 0.47% to 9,998.00.

U.S. equity futures were also modestly in the green, with the S&P 500 futures up by 0.06% to 2,038.75 and Nasdaq futures up by 0.10% to 4,399.25 during the morning London session. Meanwhile, the safe-haven gold was kicked 0.61% to 1,246.70 per troy ounce during the session.

Fallout from Iain Duncan Smith’s resignation – European forex traders were probably pricing-in Iain Duncan Smith’s resignation over the weekend since the pound lost ground to most of its forex rivals during the morning London session, even though there weren’t any major catalysts and despite the slightly risk-on environment.

Iain Duncan Smith was the Secretary of State for Work and Pensions before his political resignation over George Osborne’s proposed disability cuts, saying that it was a “compromise too far.” Duncan Smith was the former Leader of the Conservative Party but he’s pro-Brexit, which highlights the divide between and among the Conservative Party.

Basically, his resignation probably made traders think about the impending Brexit referendum.

Major Currency Movers:

USD & JPY – The moderate risk-taking during the morning London session was unkind to the Japanese yen and the U.S. dollar, which are both lower-yielding safe-haven currencies. Between the two, the Greenback had the upper hand (during the morning London session at least) since USD/JPY was up b 11 pips (+0.10%) to 111.52.

EUR/USD was up by 25 pips (+0.22%) to 1.1274, AUD/USD was up by 18 pips (+0.23%) to 0.7604, USD/CHF was down by 22 pips (-0.22%) to 0.9669

EUR/JPY was up by 37 pips (+0.30%) to 125.72, NZD/JPY was up by 21 pips (+0.27%) to 75.53, CHF/JPY was up by 35 pips (+0.31%) to 115.07

GBP – As I said earlier, European forex traders were probably pricing-in the Iain Duncan Smith’s resignation, which is why the pound was the back foot against most of its forex rivals. It did win out against the Greenback and the Japanese yen, however.

GBP/CAD was down by 13 pips (-0.07%) to 1.8794, GBP/AUD was down by 30 pips (-0.17%) to 1.8923, GBP/NZD was down by 23 pips (-0.11%) to 2.1246

Watch Out For:

  • 3:00 pm GMT: U.S. existing home sales (5.31M expected, 5.47M previous)
  • 3:30 pm GMT: Australia’s CB leading index (-0.2% previous)
  • 4:00 pm GMT: Euro Zone consumer confidence (-8 expected, -9 previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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