London Session Recap

Daily Forex Fundamentals | Written by Forex.com | Jul 11 08 12:07 GMT |


Crude oil prices surged to within pennies of the all time high in the London session and helped push the greenback lower against the majors. Oil rose just over $3 to $145.02/bbl in the span, and is now up nearly $9 in the last 24 hours. The push higher was seemingly due to news of potential supply disruptions out of Brazil (workers’ strike) and Nigeria (end of cease-fire). Tensions in the Middle East did not help matters either, as Iran continued on its missile test firing campaign overnight.

EUR/USD was bid on the developments, rising from an open near 1.5770 to a close just above the 1.5800 mark. The only piece of relevant data out of the Eurozone was German wholesale prices and they came in as expected, rising 0.9% on the month after a 1.4% result the prior. This result was welcomed as inflation numbers of late in the EU had been blowing away expectations and creating a stir at the ECB.

USD/CAD was bid near the end of the London session as Canadian employment data for June were disappointing. Payrolls fell -5.0K after an 8.4K add the prior month while the unemployment rate rose to 6.2% from 6.1%. The market was expecting an increase in payrolls of 8.0K and for the unemployment rate to remain steady at 6.1%, so the results were disconcerting. USD/CAD opened London trading near 1.0100 and was trading near 1.0150 after the number (currently around 1.0165/70). That said, the rally in USD/CAD looks a touch overdone given that the increase in oil prices should be CAD supportive and offset some of the negative employment data.

The NY session should see some price action as we get the US trade balance data for May and the University of Michigan consumer sentiment numbers for June (preliminary). The confidence survey will be closely watched for any increase/decrease in inflation expectations, which could impact Fed rate hike expectations. The futures market is currently pricing in one 25 bps rate hike by the Fed by the end of this year. This should shift around quite a bit if inflation expectations continue to become unmoored.

Upcoming Economic Data Releases (NY Session) Prior Estimate

* 7/11 12:30 CA Int'l Merchandise Trade MAY C$5.1 C$5.0
* 7/11 12:30 CA New Housing Price Index MoM MAY 0.0% 0.1%
* 7/11 12:30 US Trade Balance MAY -$60.9B -$62.4B
* 7/11 12:30 US Import Price Index (MoM) JUN 2.3% 2.0%
* 7/11 12:30 US Import Price Index (YoY) JUN 17.8% 18.6%
* 7/11 14:00 US U. of Michigan Confidence JUL P 56.4 55.5

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