Article Highlights

  • French trade balance: -€5.18B vs. -€3.70B expected, -€3.91B previous
  • French current account: -€5.2B vs. -€3.9B previous
  • Spanish industrial production y/y: 2.2% vs. 3.2% expected, 3.4% previous
  • Swiss foreign currency reserves: 576B CHF vs. 571B CHF previous
  • Chinese foreign currency reserves: $3.21T vs. $3.18T expected, $3.20T previous
  • Halifax U.K. HPI m/m: 2.6% vs. 0.9% expected, -1.4% previous
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Price action during the morning London forex session was rather choppy, but it looks like forex traders were looking mainly to risk sentiment and commodities for direction.

Major Events/Reports:

Oil rally fizzles out – The oil rally that started yesterday finally sputtered to a halt and began retreating during the morning London session, with U.S. crude oil down by 0.21% to $37.67 per barrel and Brent blend crude down by 0.10% to $39.80 per barrel. Both oil benchmarks were in positive territory at the start of the session.

There was no apparent cause for the turnaround, but the Greenback was gaining strength during the session, so that may have been one of the reasons why.

Iron ore continues slipping – Iron ore extended its losses for the second day after yesterday’s slide, with iron ore futures (62% content) down by 0.49% from yesterday’s close to $50.75 per dry metric ton during the morning London session. Market observers couldn’t pinpoint the catalyst for the drop in iron ore prices, though.

Risk aversion domination – The European markets opened on an upbeat mood, but sentiment quickly turned sour, with the pan-European FTSEurofirst 300 down by 0.41% to 1,292.97 and the DAX down by 0.54% to 9,573.00 near the end of the morning London session.

U.S. equity futures were also glowing red, with the S&P 500 futures down by 0.55% to 2,049.00 and Nasdaq futures down by 0.50% to 4,512.38 during the session. The safe-haven gold, meanwhile, was boosted by 1.10% to $1,237.30 per troy ounce during the session.

There was no clear catalyst for the switch in risk sentiment, but market analysts were pointing to specific companies. It’s also possible that risk appetite went to the gutters when oil prices did.

ECB meeting minutes – The minutes of the March 10 ECB monetary policy meeting got released earlier, and it looks like most of the content were already discussed in the March ECB press conference. However, it’s interesting to note that there were discussions for even deeper rate cuts, but ECB officials ultimately agreed against deeper cuts, particularly to the deposit rate, because it may “unduly increase the pressure on banks’ profitability” and “could also further exacerbate financial market volatility and have direct, negative repercussions on the confidence of euro area households and firms.”

Major Currency Movers:

Safe-havens – The risk-off sentiment fueled demand for the safe-haven currencies (USD, JPY, CHF), with the Japanese yen being the safe-haven of choice for most forex traders (as usual). It’s also worth noting that the Greenback was able to recover during the session, after yesterday’s FOMC meeting minutes apparently caused the Greenback to grind lower. Fed Head Yellen has a speech later, though, so it’s possible that U.S. dollar shorts are just abandoning ship just in case Yellen has a change in heart and becomes more hawkish.

EUR/USD was down by 78 pips (-0.68%) to 1.1367, GBP/USD was down by 66 pips (-0.46%) to 1.4079, NZD/USD was down by 59 pips (-0.87%) to 0.6789

USD/JPY was down by 28 pips (-0.27%) to 108.50, AUD/JPY was down by 111 pips (-1.33%) to 81.74, CHF/JPY was down by 86 pips (0.78%) to 113.36

CAD/CHF was down by 13 pips (-0.19%) to 0.7295, NZD/CHF was down by 23 pips (-0.35%) to 0.6499, AUD/CHF was down by 44 pips (-0.61%) to 0.7207

AUD – The Aussie was getting hammered very hard by its forex rivals, including its fellow comdolls (CAD and NZD), which were getting hammered themselves, making the Aussie the weakest currency during the morning London session. Aside from the risk-off vibes during the session, it’s highly likely that sliding iron ore prices were weighing down on the Aussie as well.

AUD/USD was down by 87 pips (-1.14%) to 0.7529, AUD/CAD was down by 42 pips (-0.43%) to 0.9879, AUD/NZD was down by 27 pips (-0.25%) to 1.1090

Watch Out For:

  • 1:30 pm GMT: Canadian building permits (4.0% expected, -9.8% previous)
  • 1:30 pm GMT: U.S. initial jobless claims (270K expected, 276K previous)
  • 3:00 pm GMT: ECB President Mario Draghi will deliver a speech
  • 8:00 pm GMT: U.S. consumer credit ($14.90B expected, $10.54B previous)
  • 10:30 pm GMT: Fed Chairperson Janet Yellen has a speech

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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