Article Highlights

  • German GFK Consumer Sentiment: 9.4 vs. 9.5 expected/previous
  • German Import Price Index m/m: -0.6% vs. -0.2% expected, -1.5% previous
  • French INSEE Manufacturing Confidence: 101 vs. 103 expected/previous
  • U.K. Retail Sales (inc Auto Fuel) m/m: -0.4% vs -0.7% expected, 2.3% previous
  • U.K. Retail Sales (ex Auto Fuel) m/m: 4.1% vs. 3.5% expected, 5.1% previous
  • BBA Mortgage Approvals: 45.89K vs. 47.9K expected, 46.92K previous
  • CBI Distributive Trades: 7% bal vs. 10% bal forecast/previous
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Forex volatility picked up a bit in the morning London session, mainly thanks to a slew of mixed data from the U.K., and Sterling’s reaction to it.

Major Events:

Mixed U.K. data – The economic data from the U.K. was all actually below previous reads, but with the Retail Sales data not coming in as weak as expected was actually a boost for Sterling. Forex traders must’ve taken it as a sign of consumer resiliency in the U.K., all despite uncertainty with the economy and Brexit fears.

China lifts short selling ban – A ban to stop the extraordinary selling of Chinese stocks back in August was lifted by the Chinese government today, prompting a more than 1% drop in Chinese equities as 35 domestic brokerages resumed their short-selling business. This event was likely the main influence for today’s broad market equity fall and move back to risk aversion sentiment.

Risk aversion is back – With the Chinese government no longer artificially propping up their equity markets and yesterday’s oil inventories report dragging oil prices lower, it’s no surprise that we saw pressure on the risk sentiment bulls throughout the session, especially after a bounce from February lows.  With little news catalysts and economic data to drive price action, it looks like this bled into the broad Asia markets as the Nikkei is down on the session -0.64% to 16,892.33 and the KOSPI traded lower -0.46% to 1,985.97

The pan-European FTSEurofirst 300 was down by 16.15 to 1,320.55 while the DAX was down by -1.31% to 9,891.85. Britain’s FTSE 100 was also down by -1.33% to 6,116.80. Even U.S. equity futures took a hit, with the S&P 500 futures down by -0.53% to 2,018.00 and Nasdaq futures down by -22.75 to 4,372.75 during the morning London session. The safe-haven gold was doing well, though, now up by 0.12% to $1,221.52 per troy ounce on the session.

Major Currency Movers:

GBP – Sterling was the big currency mover on the session thanks to the Retail Sales data, but surprising forex traders as it managed to climb higher after the initial drop and gaining on safe havens after the risk-bearish China news today.

GBP/USD is up 21 pips (+0.09%) to 1.4125, GBP/JPY is up 31 pips (+0.20%) to 158.88, EUR/GBP is down 18 pips (-0.23%) to .7900

AUD – With China’s equity market going bearish, it’s makes sense that comdolls take a hit on the session, especially the Aussie who conducts a big chunk of their trade with China.

AUD/USD is down 17 pips (-0.22%) to .7514, AUD/JPY is down 13 pips (-0.16%) to 84.47, AUD/CHF is down 18 pips (-0.25%) to .7324

CAD – The Loonie continues to be pulled lower after yesterday’s bearish EIA report on oil inventories, and when combined with the risk-off sentiment sparked by China, that makes the Canadian dollar the big loser on the session.

USD/CAD is up 55 pips (+0.43%) to 1.3258, CAD/JPY is down 27 pips (-0.32%) to 84.81, CAD/CHF is down 34 pips (-0.46%) to .7348

Watch Out For:

  • 12:30 pm GMT: U.S. Durable Goods Orders: -3% expected vs. 4.7% previous
  • 12:30 pm GMT: U.S. Durable Goods Orders (ex. transport): -0.3% expected vs. 1.7% previous
  • 12:30 pm GMT: Weekly Initial U.S. Jobless Claims: 268K expected vs. 265K previous

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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