Article Highlights

  • No economic reports released during the session
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There was literally nothing on the docket for today’s morning London session, so volatility got sapped and most currency pairs ended up trading sideways. There was some noticeable directional movement from Swissy and Kiwi pairs, though.

Major Events/Reports:

ECB Weidmann speaks – Deutsche Bundesbank President and ECB Governing Council Member Jens Weidmann went on the stand earlier during the session, and he dismissed calls for more easing by saying that “The current monetary policy environment does not require additional easing.” His words seem to have fallen on deaf ears, though, since the euro barely reacted and most euro pairs were trading sideways during the session.

Oil sinks – Oil benchmarks were spilling red during session, with U.S. crude oil down by 1.00% to $48.58 per barrel and Brent blend crude oil down by 0.83% to $50.12 per barrel. Market analysts blamed the slide in oil prices to renewed oversupply jitters after reports began to circulate that U.S. oil companies were expanding their drilling operations.

Other commodities rise – Oil may have been on the defensive during the morning London session, but other commodities were on the rise, with metals leading the way.

The precious metal gold was up by 0.85% to $1,286.80 per troy ounce while the base metal copper was up by 0.42% to $2.039 per pound. The demand for gold was apparently being driven by the risk aversion during the session, as well as the broader uncertainty on the Brexit referendum and this week’s FOMC statement.

As for the base metals like copper, there were no apparent catalysts, but some market analysts are pointing to the weakened dollar for the higher demand. Other analysts, meanwhile, are pointing to China’s solid industrial production data, which could mean more demand for industrial metals.

Risk-off session – European markets are starting the week with another bout of risk aversion, with the pan-European FTSEurofirst 300 down by 1.65% to 1,287.27, the blue-chip Euro Stoxx 50 down by 1.26% to 2,876.00, and the DAX down by 1.24% to 9,713.00. U.S. equity futures were also moderately in the red, with the S&P 500 futures index down by 0.28% to 2,081.50 and the Nasdaq futures index down by 0.44% to 4,438.50

Aside from risk sentiment spillover from the Asian session and lower oil prices, market analysts were also pointing to jitters ahead of the June 23 Brexit referendum since recent polls are showing a shift in favor of the “leave” camp.

Major Currency Movers:

NZD & AUD – The Kiwi and, to a lesser extent, the Aussie were edging their way higher against their forex rivals. There were no apparent catalysts, however, and the prevailing risk sentiment was risk aversion to boot. Although it’s likely that the two comdolls were being boosted by rising commodities during the session.

NZD/USD was up by 21 pips (+0.30%) to 0.7069, NZD/JPY was up by 29 pips (+0.39%) to 75.01, NZD/CHF was up by 37 pips (+0.56%) to 0.6829

AUD/USD was up by 10 pips (+0.14%) to 0.7400, AUD/JPY was up by 17 pips (+0.22%) to 78.50, AUD/CHF was up by 27 pips (+0.38%) to 0.7148

CHF – The Swissy lost out to everything during the morning London session, even though risk aversion prevailed. This may have been due to profit-taking after its relatively strong performance last week and ahead of the SNB monetary policy assessment this week. Speaking of the SNB, I wouldn’t discount the possibility that the SNB is up to its old antics of trying to weaken the Swissy again.

USD/CHF was up by 23 pips (+0.25%) to 0.9659, EUR/CHF was up by 33 pips (+0.31%) to 1.0885, GBP/CHF was up by 34 pips (+0.25%) to 1.3693

Watch Out For:

  • 1:30 pm GMT: U.K. CB leading index (0.0% previous)
  • 10:45 pm GMT: New Zealand’s FPI (0.3% previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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