London Session Forex Recap – Feb. 25, 2015

  • Swiss UBS Consumption Indicator: 1.24 vs. 1.42 previous
  • French INSEE Consumer Confidence: 92 vs. 91 forecast, 90 previous
  • U.K. BBA Mortgage Approvals: 36.39K vs. 36K forecast, 35.82K previous

Volatility died down for the comdolls, but they’re holding onto their gains sparked by the upbeat HSBC flash manufacturing PMI report released during the Asia session.  The Kiwi is especially strong on the session with the lack of dovish commentary from RBNZ Governor Wheeler, supporting the idea that there will not be any rate cuts by the RBNZ for now. Comdolls are the big winners on the session, but likely to hold around current levels going into the U.S. session:

NZD/USD is up 51 pips (+0.68%) to .7541, AUD/USD is up 51 pips (+0.66%) to .7881, AUD/NZD is down 4 pips (-0.03%) to 1.0448

The Greenback is also a mover in the morning London session, trying to climb its way out of the hole that Fed Chair Janet Yellen pushed it into after setting the expectation that we are not likely to see an interest rate hike in the U.S. for at least a couple more Fed meetings. After hitting highs just under the 1.1400 handle, EUR/USD dropped around 80 pips since the session open to current levels around 1.1340. USD/JPY is trading around 118.90 after hitting session lows around 118.65 during Asia trade.

There doesn’t seem to be a direct catalyst for the bounce higher in European trade, but it could be that forex traders are ready to buy on the dips given that the Fed is still thought to be the only major central bank expected to raise rates in the foreseeable future.

Finally, the euro seems to be the other major with uniform directional bias, down across the board (with exception against the Greenback). This is mostly against comdoll strength and likely on the continued host of issues in the euro zone to refocus on after the Greek drama stabilizes like slow growth and inflation, quantitative easing, and fighting in Ukraine.

EUR/AUD is down 92 pips (-0.64%) to 1.4385, EUR/NZD is down 107 pips (-0.70%) to 1.5029, and EUR/CAD is down 46 pips (-0.33%) to 1.4111

The forex calendar for the Wednesday afternoon London/morning U.S. session is light once again with the U.S. new home sales data at 3:00 pm GMT as the only economic data point for the rest of the session. The forecast is for 470K new homes vs. 481K previous. The forecast number is inline with the trend higher, but keep in mind that this number has disappointed expectations more times than not over the past six months. Whatever number we get, this is a top tier event, so we’ll likely see volatility pick up in the short-term for the Greenback.

We also have Federal Reserve Chair Janet Yellen testifying to the House Financial Services committee, but after pushing back rate expectations a bit in yesterday’s Senate testimony, it’s not likely we’ll see anything new from Yellen. Of course, anything can happen in the financial markets, so be ready for anything in case the Fed drops anymore monetary policy bombs on forex traders…Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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