London Session Forex Recap – Jan. 5, 2015

  • Swiss Manufacturing PMI: 54 vs. 52.8 forcast, 52.1 previous
  • U.K. Markit Construction PMI: 57.6 vs. 59 forecast, 59.4 previous
  • European Sentix Indicator: 0.9 vs. -1.0 forecast, -2.5 previous
  • German CPI (Prelim) y/y: 0.2% vs. 0.3% forecast, 0.6% previous

Forex volatility picked up in the morning London session with the euro selloff picking up steam right from the start of European trade. As I mentioned in my Asia session recap, sentiment is in full bear mode for the euro thanks to the Greek snap elections and potential exit out of the EU, as well as speculation that the European Central Bank will announce a large bond purchasing program later this month. It also doesn’t help the euro bull case with German CPI dropping once again, further support the case for monetary stimulus. The euro is lower against most of the majors with momentum still in favor of the bears:

EUR/USD is down 88 pips (-0.74%) to 1.1909, EUR/JPY is down 154 pips (-1.07%) to 142.95, and EUR/CAD is down 97 pips (-0.70%)

The British pound is also taking a broad hit on the session with no apparent catalyst at the moment, but could be attributed to risk-off behavior (European concerns) as we’re also seeing the Japanese yen gain across the board (a move which may also be supported by positive Japanese manufacturing data).  Whatever the case may, Sterling is taking a big hit against most of the majors on the session, with momentum still in favor of bears as well:

GBP/USD is down 102 pips (-0.67%) to 1.5222, GBP/JPY is down 204 pips (-1.12%) to 182.56, and GBP/AUD is down 98 pips (-0.52%) to 1.8837

The forex calendar for the Monday afternoon London/morning U.S. session is near barren with only U.S. vehicle sales for release, scheduled at 8:00 pm GMT.  The forecast is for 16.9M vs. 17.08M vehicles sold, but since this is a low tier event late in the U.S. session, we may not see much volatility during its release.  With a light calendar, Asia and European sentiment will likely continue as U.S. traders get back to their desks from the holidays and price in the European situation. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap 

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together. In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis. Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!