London Session Forex Recap – Jan. 27, 2015

  • U.K. BBA Mortgage Approvals: 35.67K vs. 36.5K forecast, 36.66K previous
  • U.K. GDP (1st Est.) q/q: 0.5% vs. 0.6% forecast, 0.7% previous; y/y at 2.7% vs. 2.8% forecast, 2.6% previous
  • U.K. Index of Services q/q: 0.8% vs. 0.9% forecast, 0.7% previous; m/m at 0.1% vs. 0.3% forecast/previous

The euro and Swiss franc was the main forex focus of the morning London session with the Swiss National Bank ready to intervene in the currency markets. Vice chairman Jean-Pierre Danthine stated this very early in the European hours, saying that the monetary policy tightening that a strong franc brings is acceptable, but only to a certain point and will be watched against both the euro and the U.S. dollar.

The reaction was a big spike in the EUR/CHF pair, moving from around .7150 at the time of the news to a high of just under .7300 before being faded. This influenced all euro and franc pairs, pushing the euro up on the day against the majors for the session while franc pairs are close to session opening prices after a whipsaw in price action:

EUR/USD is up 57 pips (+0.53%) to 1.1295, EUR/GBP is up (+0.33%) to .7470, USD/CHF is down 16 pips (-0.08%) to .9016

The Japanese yen was also a market mover after comments from Japan’s Economics Minister, Akira Amari, said that with the weakness in oil, the BOJ could have some leeway in meeting its 2% inflation target.  By not giving an exact timeframe for hitting targets, it seems forex traders are not expecting another stimulus move from the BOJ for quite some time by reducing yen shorts:

USD/JPY is down 59 pips (-0.49%) to 117.85, CAD/JPY is down 44 pips (-0.47%) to 94.46, AUD/JPY is down 24 pips (-0.26%) to 93.60

And finally, the British pound saw some action thanks to a set of weak economic data, mainly the weaker-than-expected GDP reading. While the economy growth slower than expected, the annual rate is still the fasted in 7 years. This silver lining is probably why we saw mixed priced action in Sterling pairs on the session:

GBP/USD is up 65 pips (+0.44%) to 1.5122, GBP/JPY is down 44 pips (-0.25%) to 178.14, and GBP/AUD is up 7 pips (+0.03%) to 1.9027

The forex calendar for the Tuesday afternoon London/morning U.S. session is heavy on U.S. data to give us a wide read on the U.S. economy.

At 1:30 pm GMT, we’ll get the monthly durable goods orders data for a read on manufacturers health and a forward look on the economy.  The headline forecast is for an improvement to 0.3% vs. -0.9% previous, core at 0.6% to -0.7% previous. This is a top tier economic read, so expect short-term volatility to rise for the Greenback on this release.

At 2:00 pm GMT, we’ll get the S&P Case-Shiller Home Price (4.3% forecast vs. 4.5% previous) and at 3:00 pm GMT, we’ll see the new home sales data (450K forecast vs. 438K previous), both giving a read on the U.S. housing sector.

And to round out the calendar for Tuesday, we’ll get the U.S. consumer confidence index number (95.5 forecast vs. 92.6 previous).  Both the housing sector and consumer confidence data are all mid-tier events, so they may not see the same attention from forex traders unless we get a big outlier surprise in the data. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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