Article Highlights

  • French BOF business sentiment: 101 vs. 103 expected, 102 previous
  • RBNZ statement and presser later
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Not much on the docket during today’s morning London session, so forex price action was relatively subdued. The yen was in demand, though, thanks to plunging bond yields. The Loonie, meanwhile, was tracking the recovery in oil prices.

Major Events/Reports:

Oil recovers – Oil benchmarks have been plunging since Monday, largely on another expected rise in U.S. oil inventories and lower demand from China, market analysts say. However, oil benchmarks staged a recovery during the morning London session, even though there were no apparent catalysts. Although it’s possible that speculators were just covering their shorts ahead of the the U.S. Energy Information Administration’s (EIA) official inventory numbers.

  • U.S. crude oil was up by 0.21% to $51.81 per barrel for the session, but still down by 0.69% for the day
  • Brent crude oil was up by 0.20% to $54.77 per barrel for the session but still down by 0.51% for the day

Another risk-on day in Europe – Risk appetite stuck around for another day, so the major European equity indices got another lift.

  • The pan-European FTSEurofirst 300 was up by 0.29% to 1,436.02
  • The blue-chup Euro Stoxx 50 was up by 0.24% to 3,242.50
  • Germany’s DAX was also up by 0.09% to 11,558.70

Market analysts attributed the persistent risk-taking to yet another round of positive earnings reports.

Bond yields plunge – Despite the risk-on vibes in the equities market, global bonds were being bought up, causing bond yields to plunge. Market analysts were mainly pointing to political uncertainty in the Euro Zone as the main culprit, particularly with regard to the French elections. Although U.S. bond yields likely got an extra kick lower because a 10-year bond auction is scheduled for later.

  • German 10-year bond yield down by 13.33% to 0.312%
  • U.K. 10-year bond yield down by 3.65% to 1.242%
  • U.S. 10-year bond yield down by 1.01% to 2.364%
  • Japanese 10-year bond yield down by 2.08% to 0.094%

Major Market Movers:

CAD– Loonie pairs were apparently tracking the recovery in oil prices during the session. And as a result, the Loonie ended up as the one currency to rule them all (during this session at least).

EUR/CAD was down by 29 pips (-0.20%) to 1.4018, AUD/CAD was down by 15 pips (-0.16%) to 1.0038, USD/CAD was down by 27 pips (-0.20%) to 1.3151

JPY– The plunge in global bond yields, including U.S. and Japanese bond yields, eased pressure on the yen, allowing it to finish as the second strongest currency of the session.

USD/JPY was down by 34 pips (-0.30%) to 112.01, EUR/JPY was down by 36 pips (-0.30%) to 119.38, GBP/JPY was down by 45 pips (-0.32%) to 139.89

Watch Out For:

  • 1:15 pm GMT: Canadian housing starts (197.3K expected, 207.0K previous)
  • 3:30 pm GMT: U.S. crude oil inventories (2.7M expected, 6.5M previous)
  • 8:00 pm GMT: RBNZ interest rate decision (OCR steady at 1.75%)
  • 9:00 pm GMT: RBNZ press conference
  • 9:45 pm GMT: New Zealand’s building permits (-9.2% previous)

See also:

Asian Session Recap 
U.S. Session Recap

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