Article Highlights

  • Credit Suisse ZEW survey (19.4 vs. 17.5 previous)
  • Canada’s retail sales reading coming up
  • Fed Head Yellen will testify later
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Easing Brexit jitters continued to fuel risk appetite during today’s morning London session, so the higher-yielding currencies slapped the lower-yielding currencies around once more, except for the euro, since it showed strength during the session.

Major Events/Reports:

Commodities continue to recoverCommodities were still in the green during the morning London session after tumbling hard yesterday.

The base metal copper was up by 0.71% to $2.131 per pound while, zinc was up by 0.33%t to $137.90 per kilogram. As for oil benchmarks, U.S. crude oil was up by 0.86% to $50.28 per barrel while Brent blend crude oil was up by 0.69% to $50.97 per barrel. The traditional safe-haven gold wasn’t doing too well, though, since it was down by 0.35% to $1,268.05 per troy ounce, likely because of another round of risk appetite.

Anyhow, market analysts are citing easing Brexit fears, which resulted in less demand for the Greenback as a safe-haven and made globally-traded commodities that are priced in U.S. dollars relatively cheaper and more attractive. Although some market analysts are also saying that a report from the American Petroleum Institute (API) that showed a decline in oil inventories was fueling demand for oil ahead of the government data that will be released later.

Another risk-on session – Risk appetite just won’t go away, even on the day before the Brexit referendum, with the pan-European FTSEurofirst 300 up by 0.46% to 1,342.24, the blue-chip Euro Stoxx 50 up by 0.53% to 2,991.50, the U.K. FTSE 100 up by 0.70% to 6,270.00, and the DAX up by 1.02% to 10,118.00 all by the end of the session.

Even U.S. equity futures were modestly in the green and signalling another possible round of risk-taking in the U.S. session, with the S&P 500 futures index up by 0.14% to 2,083.50 and the Nasdaq futures index up by 0.20% to 4,409.00.

Market analysts are pointing out that financial companies were the top winners due to (as you already probably guessed) easing Brexit fears as betting odds seem to slightly favor the “remain” camp as we head into the Brexit referendum.

Major Currency Movers:

NZD & AUD – Another risk-friendly session (plus recovering commodities) meant that the higher-yielding comdolls (AUD, NZD, CAD) were getting a boost. Against each other, the Loonie bowed out early on, likely because of a U.S. oil inventory report for later, as well as Canada’s retail sales reading (read Forex Gump’s trading guide here), leaving the Aussie and the Kiwi to duke it out for domination.

The Aussie initially had the upper hand, but the Kiwi was able to turn the tide just before the session ended, with AUD/NZD down by 4 pips (-0.03%) to 1.0460 by the end of the session.

NZD/USD was up by 15 pips (+0.20%) to 0.7167, NZD/JPY was up by 17 pips (+0.23%) to 74.92, NZD/CAD was up by 20 pips (+0.21%) to 0.9158

AUD/USD was up by 13 pips (+0.17%) to 0.7498, AUD/CAD was up by 17 pips (+0.18%) to 0.9582, AUD/CHF was up by 8 pips (+0.11%) to 0.7197

EUR – Most euro pairs were ranged-bound if you also consider the price action from the earlier Asian session, but most euro pairs were able to score victories during the morning London session, losing out only against the Kiwi and the Aussie. There were no apparent catalysts, but it’s possible that forex traders who shorted the euro after ECB Draghi gave his testimony yesterday were taking some profits off the table today and ahead of tomorrow’s Brexit referendum.

EUR/USD was up by 12 pips (+0.11%) to 1.1283, EUR/JPY was up by 14 pips (+0.12%) to 117.97, EUR/CAD was up by 17 pips (+0.12%) to 1.4417

GBP – The pound started the morning London session by dropping hard across the board without any apparent catalyst. The pound then spent the rest of the session clawing its way back up, but couldn’t put up a fight against the Kiwi and the Aussie.

GBP/USD was down by 2 pips (-0.01%) to 1.4684 with 1.4642 as session low, GBP/JPY was up by 5 pips (+0.03%) to 153.56 with 152.85 as session low, GBP/CHF was down by 9 pips (-0.07%) to 1.4094 with 1.4049 as session low

Watch Out For:

  • 12:30 pm GMT: Headline (0.8% expected, -1.0% previous) and core (0.6% expected, -0.3% previous) readings for Canada’s retail sales; read Forex Gump’s trading guide here
  • 1:00 pm GMT: U.S. FHFA HPI (0.6% expected, 0.7% previous)
  • 1:00 pm GMT: SNB quarterly bulletin
  • 2:00 pm GMT: Fed Head Yellen will testify before the House Financial Services Committee
  • 2:00 pm GMT: U.S. existing home sales (5.55M expected, 5.45M previous)
  • 2:00 pm GMT: Euro Zone consumer sentiment (unchanged at -7.0 expected)
  • 2:30 pm GMT: U.S. crude oil inventories (-1.3M expected, -0.9M previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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