Article Highlights

  • German factory orders m/m: -2.0% vs. 0.3% expected, 2.6% previous
  • German factory orders y/y: -0.5% as expected vs. 2.4% previous
  • Euro Zone retail PMI: 50.6 vs. 47.9 previous
  • Euro Zone Sentix indicator: 9.9 vs. 7.0 expected, 6.2 previous
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Risk appetite made a modest comeback to the markets during the morning London session, thanks to higher commodity prices, so the comdolls were in demand. The pound, meanwhile, was under pressure due to another round of polls that favored a Brexit.

Major Events/Reports:

More Brexit-related pollsTwo major Brexit-related polls were released during the morning London session and both were favorable for the “leave” camp.

The first poll was conducted by YouGov and it showed that the “leave” camp had a 4-point lead versus the “remain” camp (45% leave vs. 41% remain, 11% undecided), which is a disappointment because the previous YouGov poll showed that the “remain” and the “leave” camp were neck and neck with 41% each.

The second poll was from ICM and it revealed that the “leave” camp had a 5-point advantage against the “remain” camp (48% leave vs. 43% remain, 9% undecided). In contrast, the previous ICM showed that the “remain” camp was in the lead (47% remain vs. 44% leave, 9% undecided).

Commodities rallyCommodities staged a broad rally during the morning London session, extending gains or reversing earlier losses from the Asian session.

The precious metal gold was up by 0.13% to $1,244.55 per troy ounce while silver was up by 0.40% to $16.430 per troy ounce. Meanwhile, the base metal copper was up by 0.85% to $2.131 per pound. As for oil benchmarks, U.S. crude oil was up by 1.13%t to $49.17 per barrel while Brent blend crude oil was up by 1.13% to $50.20 per barrel.

Market analysts attributed the broad-based rally to the severe Greenback weakness in the aftermath of last Friday’s NFP report, since a weaker Greenback means that globally-traded commodities become relatively cheaper.

Modest appetite for risk – There were some signs of risk-taking during the morning London session, with the pan-European FTSEurofirst 300 up by 0.10% to 1,340.86, the blue-chip Euro Stoxx 50 up by 0.14% to 3,001.00, and the DAX up by 0.14% to 10,117.00.

U.S. equity futures were also modestly in the green, with the S&P 500 futures index up by 0.15% to 2,101.00 and the Nasdaq futures index up by 0.18% to 4,517.00.

Market analysts pointed out that mining and oil companies were leading European equities higher, so it’s probably safe to say that the risk-on vibes during the session was due to the broad-based commodities rally.

Major Currency Movers:

Comdolls – Rising commodity prices and returning risk appetite gave the higher-yielding comdolls (AUD, CAD, NZD) a boost during the morning London session.

AUD/USD was up by 23 pips (+0.31%) to 0.7356, AUD/JPY was up by 28 pips (+0.36%) to 78.78

NZD/USD was up by 6 pips (+0.08%) to 0.6923, NZD/JPY was up by 11 pips (+0.15%) to 74.15

USD/CAD was up by 33 pips (-0.26%) to 1.2940, EUR/CAD was up by 35 pips (-0.24% ) to 1.4678

GBP – The pound started the session by climbing higher, likely because of profit-taking after last week’s weakness, as well as the drop during the Asian session. However, pound pairs began backtracking as the morning London session progressed, likely because the market got swamped by another round of Brexit-related polls that were skewed towards the “leave” camp.

GBP/USD was up by 21 pips (+0.15%) to 1.4394 with 1.4463 as session high, GBP/CAD was down by 23 pips (-0.13%) to 1.8625 with 1.8726 as session high, GBP/AUD was down by 33 pips (-0.17%) to 1.9563 with 1.9638 as session high

CHF – The Japanese yen and the Greenback were under bearish pressure because of the risk-on environment, but the Swissy was in heavy demand during the session. In fact, it managed to win out against all the comdolls except the Aussie, making it the second-strongest currency during the session. There weren’t any apparent catalysts for the Swissy, though.

USD/CHF was down by 26 pips (-0.27%) to 0.9745, EUR/CHF was down by 29 pips (-0.26%) to 1.1053, NZD/CHF was down by 13 pips (-0.19%) to 0.6746

Watch Out For:

  • 2:00 pm GMT: U.S. labor market conditions index (-0.9 previous)
  • 4:30 pm GMT: Fed Chairperson Janet Yellen will talk about her economic outlook
  • 11:00 pm GMT: BRC retail sales monitor (-0.9% previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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