London Session Forex Recap – Jan. 29, 2015

  • German Retail Sales y/y: 4% vs. 3.6% forecast, -1.0% previous
  • French Consumer Spending y/y: 1.5% vs. 0.5% forecast, 0.2% previous
  • French PPI y/y: -2.9% vs. -1.9% previous; m/m at -0.9% vs. -0.1% previous
  • Swiss KOF Leading Indicator: 97 vs. 94.7 forecast, 98.8 previous
  • U.K. Net Consumer Credit: 0.6B GBP vs. 1.2B GBP forecast/previous
  • U.K. Mortgage Approvals: 60.3K vs. 59K forecast/previous
  • German Unemployment Rate: 6.5% vs. 6.5% forecast, 6.6% previous
  • European Headline Flash HICP y/y: -0.6% vs. -0.5% forecast, -0.2% previous; core y/y at 0.5% vs. 0.7% forecast/previous
  • European Unemployment Rate: 11.4% vs. 11.5% forecast/previous

Thanks to a heavy London session forex calendar, currency price action was choppy as traders reacted to a mix of good & bad reads from the European region. There wasn’t a strong directional move, especially for the euro which had positive German retail sales (the best since before the 2008 financial crisis) and French consumer spending to bring in the buyers, but may have turned bearish with inflation ticking lower once more to new record lows. Overall, the euro is down on the session against most of the majors:

EUR/USD is down 15 pips (-0.14%) to 1.1303, EUR/JPY is down 79 pips (-0.60%) to 133.04, EUR/GBP is down 2 pips (-0.03%) to .7509

The Australian dollar is seeing some volatility, bouncing back from a bit of Asia weakness ignited by a report showing a dip in producer prices (y/y 1.2% vs. 1.2% previous).  The Aussie is now trading in the green on the session against most of the majors and seems to be picking up steam heading into U.S. trade:

AUD/USD is up 10 pips (+0.14%) to .7770, EUR/AUD is down 41 pips (-0.28%) to 1.4541, AUD/NZD is up 38 pips (+0.36%) to 1.0715

And the Japanese yen continued its rally higher in London trade, possibly triggered by the dismal Japanese releases (weak inflation and household spending) sparking risk-off sentiment flows into safe havens. The yen’s move continues to be up on the session against the majors with momentum still in its favor at the moment:

USD/JPY is down 59 pips (-0.50%) to 117.65, GBP/JPY is down 97 pips (-0.55%) to 177.19, CAD/JPY is down 84 pips (-0.90%) to 92.87

The forex calendar for the Friday afternoon London/morning U.S. session has potential U.S. dollar and Loonie market moving events in the lineup to close out the trading week.

At 1:30 pm GMT we’ll get the bulk of the potential market movers, notably the GDP reads from both the U.S. and Canada. Canada issues a monthly read on GDP (change in value of all good and services in the economy), which is expected to come in this month lower at around 0.0% vs. 0.3% in the previous month.

From the U.S. we’ll get the advanced quarterly read, forecasted to come in at 3.0% vs. the red hot 5.0% in the last quarter. We’ll also get the core PCE price index data (the Federal Reserve’s preferred measure of inflation) and U.S. employment cost index data.  It’s a mix of core economic indicators so volatility should pick up nicely for both the Greenback and Loonie, which makes USD/CAD the pair to watch this hour.

At 2:45 pm GMT we’ll get the latest read on manufacturing conditions in the form of the Chicago PMI number (57.5 forecast vs. 58.8 previous), and at 3:00 pm GMT we’ll get a read on the consumer sector with the University of Michigan Sentiment survey data (98.2 forecast vs. 98.2 previous).  Both are mid-tier events that may not garner much attention without a big outlier surprise, so earlier Friday sentiment may continue to be an influence like North American GDP data and risk-off flows. 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!