Article Highlights

  • German Bundesbank monthly report released
  • No other report released during the London session
  • Oil now off its lows after Doha debacle
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The forex calendar for today’s morning London session was pretty sparse, so forex traders turned mainly to commodities for direction. Although some profit-taking was also likely taking place since the Greenback and the yen were in retreat despite the risk-off vibes.

Major Events/Reports:

Risk aversion lingers – The risk-off vibes from the earlier session persisted into the morning London session, with the pan-European FTSEurofirst 300 down by 0.28% to 1,346.62, the Euro Stoxx 50 down by 0.24% to 3,046.50, and the DAX down by 0.12% to 10,039.50 near the end of the session.

Gold, meanwhile, was up by 0.40% to $1,239.60 per troy ounce, which signaled safe-haven demand. As for U.S. equity futures, they were wallowing in negative territory, so the risk-off sentiment has a high chance of carrying over into the U.S. session, with the S&P 500 futures down by 0.25% to 2,069.75 and Nasdaq futures down by 0.21% to 4,528.88 during the morning London session.

Almost all market analysts blamed the lack of risk-taking during the morning London session to disappointment over the failed Doha deal, which was meant to help curb the oil glut by putting a limit to oil production.

Oil off its lows – Oil benchmarks were still down in the dumps for the day, but they were able to recover a bit during the morning London session, with U.S. crude oil was still down by 3.79% to $40.13 per barrel, but it went as low as $39.36 per barrel during the earlier Asian session. Brent blend crude, meanwhile, was still down by 3.50% to $41.59 per barrel, but it’s off its lows around $40.58.

This was most likely due to profit-taking, but there were also reports circulating during the session about Russian Energy Minister Alexander Novak saying that “the door is not closed” on the oil freeze deal and that Russia will be joining such a deal if the OPEC member nations can hammer out a deal.

There were also reports about Iran urging its fellow oil producers not to give up on an oil freeze deal while reiterating that Iran wants to reach its pre-sanctions levels of oil production before it can commit to an oil freeze deal.

Iron ore soars – Oil wasn’t the only commodity that was climbing during the morning London session since iron ore extended its gains and was up about 1.49% during the morning London session, thanks to earlier reports about Shanghai steel jumping by around 3% due to stronger seasonal demand despite China’s GDP growing at a declining rate, with the Q1 2016 annual GDP growth of 6.7% being the weakest in seven years.

Major Currency Movers:

AUD & CAD – Despite the risk-off environment, the Aussie and the Loonie were broadly on the rise during the morning London session, thanks respectively to the iron ore rally and oil recovery. Between the two, the Aussie easily won out, emerging as the one currency to rule them all during the morning London session.

AUD/USD was up by 59 pips (+0.77%) to 0.7707, AUD/CAD was up by 28 pips (+0.29%) to 0.9958, AUD/CHF was up by 45 pips (+0.61%) to 0.7437

USD/CAD was down by 63 pips (-0.50%) to 1.2918, EUR/CAD was down by 48 pips (-0.33%) to 1.4607, GBP/CAD was down by 48 pips (-0.26%) to 1.8309

USD & JPY – The prevalence of risk aversion during the morning London session should have encouraged demand for the safe-haven currencies. Unfortunately for the safe-havens, that didn’t happen. In fact, the Japanese yen and the Greenback were in full retreat, with the yen being the weaker of the two (and the weakest currency during the session).

There were no catalysts, but given that the two currencies were the main beneficiaries of the failed Doha deal, it’s probably safe to assume that this was just profit-taking

NZD/USD was up by 42 pips (+0.61%) to 0.6939, EUR/USD was up by 19 pips (+0.17%) to 1.1308, GBP/USD was up by 39 pips (+0.28%) to 1.4179

AUD/JPY was up by 86 pips (+1.05%) to 83.47, CAD/JPY was up by 64 pips (+0.78%) to 83.81, NZD/JPY was up by 62 pips (+0.85%) to 75.10

Watch Out For:

  • 1:30 pm GMT: Canada’s foreign securities purchases ($7.52B expected, $13.51B previous)
  • 1:30 pm GMT: New York Fed President William Dudley will give a short speech
  • 3:00 pm GMT: U.S. NAHB builders survey (59 expected, 58 previous)
  • 3:30 pm GMT: Australia’s CB leading index (-0.4% previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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