London Session Forex Recap – Jan. 28, 2015

  • German GFK Consumer Sentiment: 9.3 VS. 9.1 forecast, 9.0 previous
  • Swiss UBS Consumption Indicator: 1.42 vs. 1.29
  • German Import Price Index m/m: -1.7% vs. -1.5% forecast, -0.8% previous; y/y at -3.7% vs. -3.4% forecast, -2.1% previous
  • French INSEE Consumer Confidence Index: 90 vs. 91 forecast, 90 previous

It looks like the Aussie gave back some of its gains sparked by the quarterly Australian inflation report released during the Asia session, which showed a lower-than-expected rise in inflation in Q4 2014, but the annual read is still within the Reserve Bank of Australia’s target range.  Right at the European open, we saw the Australian dollar start to fade and reverse across the board without a direct catalyst.  Whatever the case may be for the reversal, the Aussie is still up on the session but continues to fade:

AUD/USD is up 22 pips (+0.24%) to .7958, AUD/JPY is up 22 pips (+0.22%) to 93.74, and EUR/AUD is down 80 pips (-0.56%) to 1.4258

The euro has been trending lower all session without a major catalyst, which could mean we’re likely seeing concerns priced in on the upcoming renegotiation between Greece and the EU on bailout terms.  We also saw weak German import price data and the new ECB quantitative easing program could also be putting pressure on the shared currency.  Overall, the euro is broadly lower on the session, and likely continue until we see the major events coming up near the end of the U.S. trading session:

EUR/USD is down 26 pips (-0.24%) to 1.1352, EUR/JPY is down 43 pips (-0.33%) to 133.65, and EUR/NZD is down 102 pips (-0.67%) to 1.5155

The forex calendar for the Wednesday afternoon London/morning U.S. session is near empty, but the one event we have could pack a big volatile punch to the forex markets.

At 7:00 pm GMT, we’ll get the latest decision on U.S. monetary policy from the Federal Open Market Committee (FOMC).  My main man Forex Gump highlighted potential commentary  we may see from this month’s statement in his blog yesterday, including the potential risks of falling prices, so it may behoove forex traders to be prepared in case we see something more than the patience rhetoric on interest rates that we saw in at the last meeting.  There will be no follow up press conference, so the reaction should be a swift one as soon as they release the statement.

Right at the U.S. session close, we will get the Reserve Bank of New Zealand’s monetary policy statement, which economists forecast no change to the 3.5% interest rate.  Of course, we’ve seen a slew of easing surprises from central banks (including the Bank of Canada and the Bank of Singapore) in the past few weeks, so definitely be on the ready with any Kiwi orders or positions going into that event at 8:00 pm GMT. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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