Article Highlights

  • German retail sales m/m: -1.1% vs. 0.4% expected, -0.3% previous
  • French consumer spending m/m: 0.2% vs. 0.4% expected, 0.5% previous
  • French flash HICP y/y: -0.2% vs. -0.1% expected and previous
  • Swiss KOF leading indicator: 102.7 vs. 012.5 expected, 102.8 previous
  • BOE net consumer credit: £1.9B vs. £1.3B expected, £1.4B previous
  • BOE mortgage approvals: 71.4K vs. 74.2k expected, 73.2K previous
  • Euro Zone flash HICP y/y: -0.2% vs. 0.0% expectes, same as previous
  • Euro Zone flash core HICP y/y: 0.8% vs. 0.9% expected, 1.0% previous
  • Euro Zone jobless rate: 10.2% vs. steady at 10.3% expected
  • Euro Zone preliminary Q1 GDP q/q: 0.6% vs. 0.4% expected, 0.3% previous
  • Euro Zone preliminary Q1 GDP y/y: 1.6% vs. 1.5% expected, 1.6% previous
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Price action was pretty choppy during today’s morning London session, and some currency pairs were even bound in tight ranges. The euro was clearly moving in a uniform direction, though.

Major Events/Reports:

Broad-based commodities rally – Most commodities were glowing gamma green during the morning London session. The precious metal gold, for instance, was up by 1.02% to $1,279.35 while the industrial metal copper was up by 2.35% to $2.284 per pound during the session. Oil benchmarks were also on the up and up, with U.S. crude oil up by 1.22% to $46.59 per barrel and Brent crude oil up by 0.90% to $48.20 per barrel near the end of the morning London session.

Market analysts attributed the broad-based commodities rally to the weak U.S. dollar, which got kicked even lower after U.S. GDP growth was revealed to have slowed during the first quarter, not to mention continued disappointment over the lack of forward guidance during the most recent FOMC statement.

Oh, for the newbies out there what commodities have to do with the Greenback, globally-traded commodities are generally priced in U.S. dollars, so a weaker dollar makes commodities relatively cheaper.

Euro Zone reports – There were a ton of Euro Zone economic reports that were released during the session, but let’s focus only on the reports for the Euro Zone as a whole.

Let’s begin with the Euro Zone’s poor preliminary HICP readings. The annual headline HICP reading for April came in at -0.2%, missing expectations that it will remain flat like last month. The annual core HICP reading, meanwhile, came in at 0.8%, which is just a tick lower than the expected 0.9%.

Details of the inflation report showed that energy-related components continue to drag on the Euro Zone’s headline HICP reading, although the cost of services also increased at a slower rate (1.0% vs. 1.4% previous), which is why the core reading got slapped lower as well.

Moving on, the labor situation in the Euro Zone continued to improve in March since the jobless rate ticked lower to 10.2%, which is the lowest reading since August 2011, according to the details of the jobs report.

Finally, the Euro Zone’s Q1 2016 GDP grew by 0.6% quarter-on-quarter, which is the fastest pace in a year, while the year-on-year reading came it at 1.6%, according to the preliminary GDP report.

Another round of risk aversion – The gloomy mood from the earlier Asian session spilled over into today’s morning London session, with the pan-European FTSEurofirst 300 down by 1.03% to 1,359.04 and the DAX down by 1.36% to 10,181.00. U.S. equity futures were also hinting that the risk-off sentiment is also gonna spill over into the U.S. session, with the S&P 500 futures down by 0.11% to 2,070.25 and the Nasdaq futures down by 0.21% to 4,372.62 during the morning London session.

Market analysts blamed the gloomy mood to continuing disappointment over the BOJ’s inaction, although some market analysts also pointed to poor updates for specific companies.

Major Currency Movers:

EUR – The euro was broadly on the rise during the morning London session. Whether this is due to capital flows from European equities to the lower-yielding euro or actual euro demand because of the net positive Euro Zone economic reports is not very clear, however.

EUR/USD was up by 18 pips (+0.16%) to 1.1405, EUR/GBP was up by 24 pips (+0.21%) to 0.7805, EUR/AUD was up by 53 pips (+0.36%) to 1.4936

NZD – The risk-off sentiment may have been bad for the Aussie, but the other comdolls weren’t doing too bad since they were probably being supported by the broad-based commodities rally, which is good for the comdolls. The Kiwi, in particular, was able to win out against most of its forex rivals.

NZD/USD was up by 17 pips (+0.25%) to 0.6977, NZD/CHF was up by 16 pips (+0.25%) to 0.6718, NZD/JPY was up by 10 pips (+0.13%) to 74.73

AUD – The prevalence of risk aversion during the morning London session was pretty toxic for the higher-yielding Aussie since it ended up losing to all its forex rivals. Aside from the risk-off sentiment, it’s possible that Aussie longs were abandoning ship to avoid weekend risk or taking profits before next week’s RBA monetary policy decision.

AUD/USD was down by 15 pips (-0.20%) to 0.7635, AUD/CAD was down by 23 pips (-0.25%) to 0.9558, AUD/NZD was down by 50 pips (-0.46%) to 1.0940

Watch Out For:

  • 12:30 pm GMT: Canadian GDP (-0.2% expected, 0.6% previous)
  • 12:30 pm GMT: Canadian RMPI (3.7% expected, -2.6% previous)
  • 12:30 pm GMT: Canadian IPPI (0.5% expected, -1.1% previous)
  • 12:30 pm GMT: U.S. personal income (0.3% expected, 0.2% previous)
  • 12:30 pm GMT: U.S. personal spending (0.2% expected, 0.1% previous)
  • 12:30 pm GMT: U.S. employment cost index (0.6% expected, 0.6% previous)
  • 12:30 pm GMT: U.S. core PCE price index (0.1% expected, 0.1% previous)
  • 1:45 pm GMT: Chicago PMI (52.6 expected, 53.6 previous
  • 2:00 pm GMT: University of Michigan final U.S. consumer sentiment (revision from 89.7 to 90.0 expected)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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