Article Highlights

  • U.K. Nationwide HPI m/m: 0.5% vs. 0.0% expected, 0.2% previous
  • U.K. Nationwide HPI y/y: 5.2% vs. 4.5% expected, 5.1% previous
  • Spanish jobless rate: 20.0% vs. 20.5% expected, 21.0% previous
  • German jobless rate: steady at 6.1% as expected
  • German unemployment change: -7K vs. -3K expected, -6K previous
  • Euro Zone business climate: 0.39 vs. 0.17 expected, 0.22 previous
  • Euro Zone industrial sentiment: -2.4 vs. -3.3 expected, -2.8 previous
  • Euro Zone economic sentiment: 104.6 vs. 103.5 expected, 103.6 previous
  • Euro Zone consumer sentiment: -7.9 as expected vs. -7.0 previous
  • German HICP m/m: 0.4% vs. 0.3% expected, 0.1% previous
  • German HICP y/y: 0.4% vs. 0.3% expected, 0.2% previous
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Risk aversion was the name of the game during the morning London session, so the safe-havens got some buyers while the higher-yielding comdolls got whipped. Interestingly enough, the Swissy was the safe-haven of choice today.

Major Events/Reports:

Gloomy mood during the session – There were signs of risk aversion in the European equities market during the session, with the pan-European FTSEurofirst 300 down by 0.58% to 1,343.92, the blue-chip Euro Stoxx down by 0.71% to 2,977.00, the U.K.’s FTSE 100 down by 0.28% to 6,731.90, and the DAX down by 0.03% to 10,317.00.

The lack of risk-taking was also slightly weighing down on U.S. equity futures, with the S&P 500 futures index down by 0.12% to 2,158.00 and the Nasdaq futures index down by 0.13% to 4,701.62.

Market analysts couldn’t pinpoint the reason for the overall risk-off environment, but they did point out that disappointing updates for specific companies and pessimism over Europe’s banking stocks were probably souring overall sentiment.

Commodities charge higher – European equities may have been bleeding out during the morning London session, but commodities were on a bullish rampage, especially metals.

The precious metals were really soaring, probably because the prevalence of risk aversion also gave them a boost, with gold up by 1.11% to $1,349.35 per troy ounce and silver up by 2.22% to $20.438 per troy ounce.

Base metals were also on the offensive, with copper up by 1.05% to $2.208 per pound, nickel up by 2.03% to $10,550.00 per dry metric ton, and zinc up by 0.68% to $2,183.50 per dry metric ton.

Oil benchmarks were also in the green, but they weren’t doing as well, probably because the renewed oversupply jitters continue to weigh down on oil prices. U.S. crude oil was up by 0.33% to $42.06 per barrel while Brent crude oil was up by 0.25% to $44.02 per barrel.

The broad-based demand for commodities during the session was very likely due to the Greenback’s slump due to lack of forward guidance from the U.S. Fed in yesterday’s FOMC statement.

And for the newbies out there, most globally-traded commodities are denominated in U.S. dollars, so a weaker dollar would make commodities relatively cheaper and more attractive, especially if you’re holding currencies other than the Greenback.

Major Currency Movers:

NZD – Despite the broad commodities rally, the comdolls (NZD, AUD, CAD) were feeling some bearish pressure, so risk sentiment seems to be the main driver for price action during the session. Anyhow, the Kiwi ended up getting burned the most.

NZD/USD was down by 19 pips (-0.27%) to 0.7085, NZD/CHF was down by 32 pips (-0.46%) to 0.6966, NZD/JPY was down by 17 pips (-0.23%) to 74.17

GBP – The pound halted its broad-based slide, but was still showing weakness during the session. Not even the better-than-expected HPI numbers could stop the pound from losing out to everything, with the exception of the Kiwi.

GBP/USD was down by 35 pips (-0.27%) to 1.3157, GBP/JPY was down by 33 pips (-0.24%) to 137.74, GBP/CHF was down by 58 pips (-0.45%) to 1.2938

CHF – Other than the risk-off vibes and the resulting safe-haven flows, there wasn’t really any other major bullish catalyst for the Swissy during the morning London session. Still, the Swissy ended up as the best-performing currency of the session.

USD/CHF was down by 20 pips (-0.20%) to 0.9832, EUR/CHF was down by 25 pips (-0.24%) to 1.0899, AUD/CHF was down by 21 pips (-0.29%) to 0.7396

Watch Out For:

  • 12:30 pm GMT: U.S. initial jobless claims (262K expected, 253K previous)
  • 12:30 pm GMT: U.S. goods trade balance (-$61.10B expected, -$60.59B previous)
  • 10:45 pm GMT: New Zealand’s building consents (-0.9% previous)
  • 11:05 pm GMT: U.K. GFK consumer confidence (-7 expected, -9 previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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