Article Highlights

  • French final HICP m/m: unchanged at -0.4% as expected
  • French final HICP y/y: unchanged at 0.4% as expected
  • Italian trade balance: €4.66 billion vs. €5.03 billion previous
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There was nothing major on the docket for today’s morning London session, so forex traders turned mainly to risk sentiment for direction. There was some wonky price action, though, from the Swissy in particular.

Major Events/Reports:

Risk appetite returns – Signs of risk-tasking returned to Europe after yesterday’s gloomy mood, with most of the major European equity indices in positive territory.

  • The pan-European FTSEurofirst 300 was up by 0.48% to 1,360.59
  • The blue-chip Euro Stoxx 50 was up by 0.68% to 3,040.00
  • The DAX was up by 0.71% to 10,726.00

Even U.S. equity futures were enjoying the renewed appetite for risk, signalling a potential risk sentiment spill-over into the U.S. session.

  • The S&P 500 futures index was up by 0.25% to 2,178.25
  • The Nasdaq futures index was up by 0.31% to 4,796.38

According to some market analysts, the risk-on mood was due to upbeat corporate earnings reports for several European companies.

Oil sinks further – Commodities were mixed during the session after rallying hard yesterday. Oil was noticeable, though, since it continued yesterday’s theme by sliding even lower.

  • U.S. WTI crude oil was down by 0.36% to $41.56 per barrel
  • Brent blend crude oil was down by 0.25% to $43.95 per barrel

The slide in oil prices during the session was likely due to continued disappointment over Saudi Arabia’s oil production numbers and the increase in U.S. oil inventories from yesterday, as well as an earlier report from the IEA which forecasted that demand for oil will weaken next year.

Major Currency Movers:

CAD – Despite the slide in oil prices, the Loonie was in high demand during the morning London session. Loonie bears began pouncing on it near the end, but the Loonie was able to hold onto its gains and emerged as the one currency to rule them all (during this session at least).

USD/CAD was down by 12 pips (-0.09%) to 1.3046 with 1.3028 as session low, EUR/CAD was down by 38 pips (-0.26%) to 1.4542 with 1.4521 as session low, GBP/CAD was down by 74 pips (-0.44%) to 1.6917 with 1.6891 as session low

CHF – The yen and the Greenback were mixed but mostly weak during the session, likely because of limited safe-haven flows due to the risk-friendly environment. That was not the case for the Swissy, though, since it almost stole victory from the Loonie near the end of the session when the Loonie was getting barraged by sellers while the Swissy got a major bullish boost.

There was no apparent catalyst for this bullish boost, however. And we can’t really pin this on the SNB since the SNB wants to weaken the Swissy, not strengthen it.

USD/CHF was down by 3 pips (-0.04%) to 0.9742, EUR/CHF was down by 22 pips (-0.20%) to 1.0860, NZD/CHF was down by 12 pips (-0.17%) to 0.7059

GBP – The pound got another round of pounding today after a more mixed performance during yesterday’s morning London session. There were no clear catalysts, so the pound’s weakness may have been due to another round of Brexit-related outflows.

GBP/USD was down by 46 pips (-0.36%) to 1.2965, GBP/CHF was down by 49 pips (-0.39%) to 1.2631, GBP/AUD was down by 61 pips (-0.36%) to 1.6811

Watch Out For:

  • 12:30 pm GMT: U.S. initial jobless claims (265K expected, 269K previous)
  • 12:30 pm GMT: U.S. import price index (-0.4% expected, 0.2% previous)
  • 12:30 pm GMT: Canada’s NHPI (0.2% expected, 0.7% previous)
  • 10:30 pm GMT: Business New Zealand’s manufacturing index (57.7 previous)
  • 10:45 pm GMT: Headline( 1.0% expected, 0.8% previous) and core (1.1% expected, 1.0% previous) readings for New Zealand’s quarterly retail sales

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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