Article Highlights

  • Italian trade balance: €7.80B vs. €3.67B expected, €4.66B previous
  • Euro Zone labor cost index y/y: 1.00% vs. 1.50% expected, 1.60% previous
  • U.S. CPI readings coming up
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Not much on the docket for today’s morning London forex session, but there was price action aplenty as forex traders turned mainly to risk sentiment and commodities for direction.

Major Events/Reports:

Gloomy risk sentiment – European equity indices were down and out for the count, so risk aversion was clearly the dominant risk sentiment during the session.

  • The pan-European FTSEurofirst 300 was down by 0.87% to 1,327.96
  • The blue-chip Euro Stoxx 50 was down by 1.50% to 2,931.00
  • The U.K.’s FTSE 100 was down by 0.38% to 6,704.70
  • The DAX was down by 1.51% to 10,274.00

U.S. equity futures were also in the red, indicating that the risk-on mood may carry over into the upcoming U.S. session.

  • S&P 500 futures were up down 0.47% to 2,128.00
  • Nasdaq futures were up down 0.31% to 4,798.88

Market analysts are attributing the risk-off mood to the news that the U.S. Department of Justice has demanded Deutsche Bank to pay $14 billion in order to settle claims that the bank improperly sold mortgage-backed securities.

Deutsche Bank shares were apparently dumped, dragging down the shares of other financial companies with it and souring overall risk sentiment, according to market analysts.

Commodities crumbleCommodities were broadly in decline during the morning London session:

Oil benchmarks were leading the way lower:

  • U.S. WTI crude oil was down by 1.62% to $43.20 per barrel
  • Brent blend crude oil was down by 1.67% to $45.81 per barrel

Base metals got kicked to the downside:

  • Copper was down by 0.30% to $2.153 per pound
  • Aluminum was down by 0.19% to $1,569.25 kilogram
  • Nickel was down by 0.62% to $9,650.00 per dry metric ton

Precious metals did not get any support, despite the risk-off vibes:

  • Gold was down by 0.20% to $1,315.35 per troy ounce
  • Silver was down by 0.46% to $18.953 per troy ounce

Market analysts couldn’t point out the reason for the broad-based commodities rout. However, they attributed the slump in oil prices to renewed oversupply jitters on reports of increasing Iranian exports and the end of supply disruptions in Libya and Nigeria.

Major Market Movers:

JPY – The safe-haven yen really enjoyed the risk-off mood since it ended up as the one currency to rule them all, at least during the morning London session.

CHF/JPY was down by 19 pips (-0.19%) to 104.57, CAD/JPY was down by 34 pips (-0.44%) to 77.08, GBP/JPY was down by 62 pips (-0.46%) to 134.18

GBP – There weren’t any major catalysts for the pound. Still, it showed broad-based weakness during the session. It’s possible that the pound’s weakness was linked to the yesterday’s dovish BOE statement, though.

GBP/USD was down by 53 pips (-0.40%) to 1.3173, GBP/CHF was down by 34 pips (-0.27%) to 1.2830, GBP/AUD was down by 41 pips (-0.24%) to 1.7558

CAD – The pound may have been weak, but the Loonie was slightly weaker. The Loonie even ended up as the worst-performing currency of the session, as the drop in oil prices weighed down on the Loonie.

USD/CAD was up by 53 pips (+0.40%) to 1.3215, EUR/CAD was up by 52 pips (+0.35%) to 1.4837, NZD/CAD was up by 31 pips (+0.32%) to 0.9648

Watch Out For:

  • 12:30 pm GMT: Headline (0.1% expected, 0.0% previous) and core (0.2% expected, 0.1% previous) readings for U.S. CPI
  • 12:30 pm GMT: Canadian manufacturing sales ($10.12B expected, $9.02B previous)
  • 12:30 pm GMT: Canadian foreign security purchases (0.6% expected, 0.8% previous)
  • 2:00 pm GMT: Preliminary University of Michigan consumer sentiment (90.6 expected, 89.8 previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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