Article Highlights

  • Euro Zone current account: €19.0B vs. €21.3B expected, €27.5B previous
  • German ZEW economic sentiment: 11.2 vs. 8.0 expected, 4.3 previous
  • German ZEW current conditions: 47.7 vs. 50.8 expected, 50.7 previous
  • Euro Zone ZEW economic sentiment: 21.5 vs. 13.9 expected, 10.6 previous
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Risk appetite returned to the European markets during today’s morning London session, so we got a rather lopsided battle between the higher-yielding currencies and the safe-havens, with the safe-havens obviously on the receiving end of a beat-down.

Major Events/Reports:

Commodities rally hard – Commodities were broadly in the green during the morning London session, with precious metals like gold up by 0.83% to $1,245.20 per troy ounce during the session. Oil benchmarks, meanwhile, were on the up and up, with U.S. crude oil up by 1.58% to $41.84 per barrel while Brent crude oil was up by 1.96% to $43.75 per barrel.

The broad-based commodities rally was likely due to the weakened U.S. dollar, which made commodities relatively cheaper. Market analysts were also pointing to individual catalysts, though. Oil, for example, was apparently being pushed higher by the third day of strikes by Kuwaiti oil workers, which halved Kuwaiti oil output. Demand for the safe-haven gold (despite the risk-on sentiment), meanwhile, was being driven by silver buying in China, which also boosted demand for gold.

Risk-taking aplenty – Risk appetite made a major comeback during today’s morning London session, with the pan-European FTSEurofirst 300 up by 1.25% to 1,372.22 and the DAX up by 2.37% to 10,360.00. U.S. equity futures were also in the green, with the S&P 500 futures up by 0.42% to 2,095.50 and the Nasdaq futures up by 0.65% to 4,576.00 during the morning London session.

Market analysts generally attributed the risk-on sentiment to the broad-based commodities rally and positive updates for individual companies.

Major Currency Movers:

CAD – The Loonie was the king (or queen) of pips during the morning London session, thanks to another oil rally and the prevailing risk-on sentiment.

USD/CAD was down by 40 pips (-0.32%) to 1.2709, AUD/CAD was down by 37 pips (-0.38%) to 0.9901, NZD/CAD was down by 17 pips (-0.19%) to 0.8934

GBP – The pound was the second-strongest currency during the session, barely losing out only to the mighty Loonie. There were no direct catalysts for the pound’s weakness, but BOE Guv’nah Mark Carney will testify before the Lords Economic Affairs Committee later, so perhaps pound shorts were just getting out of their positions ahead of that event.

GBP/USD was up by 41 pips (+0.29%) to 1.4374, GBP/CHF was up by 54 pips (+0.39%) to 1.3844, GBP/JPY was up by 113 pips (+0.73%) to 157.31

JPY – All the safe-haven currencies (CHF, USD, JPY) were feeling some bearish pressure during the morning London session, but the Japanese yen was clearly the weakest safe-haven of them all (and the weakest currency of the session to boot).

USD/JPY was up by 48 pips (+0.44%) to 109.44, CHF/JPY was up by 37 pips (+0.33%) to 113.62, CAD/JPY was up by 65 pips (+0.77%) to 86.11

Watch Out For:

  • 1:30 pm GMT: U.S. building permits (1.20M expected, 1.17m previous)
  • 1:30 pm GMT: U.S. housing starts (1.17M expected, 1.18M previous)
  • 2:30 pm GMT: RBA Governor Glenn Stevens will give a speech
  • 3:55 pm GMT: BOE Governor Mark Carney will testify before the Lords Economic Affairs Committee
  • 4:00 pm GMT: BOC Governor Stephen Poloz will testify before the House of Commons Standing Committee on Finance
  • Dairy auction currently underway; auction usually ends at around 2:00 pm GMT

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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