London Session Forex Recap – Mar. 3, 2015

  • German retail sales increased by 2.9% in Jan vs. projected 0.5% gain
  • Employment in Spain up by 13.5K vs. estimated 10.5K decline
  • Euro zone producer prices fell by 0.9% in Jan, worse than projected 0.5% drop
  • Swiss economy grew by 0.6% in Q4 2014, stronger than projected 0.3% expansion
  • U.K. construction PMI jumped from 59.1 to 60.1, higher than 59.0 consensus

And euro bears are back in the game! The shared currency chalked up a fresh batch of losses against its forex counterparts in the past few hours, despite stronger than expected economic data. Germany actually printed a stronger than expected 2.9% gain in retail sales, much higher than the projected 0.5% uptick, while Spain posted an 13.5K increase in hiring instead of the estimated 10.5K decline.

Euro pairs managed to bounce after those upbeat reports were printed but the gains were short-lived, as EUR/USD is still down 25 pips (-0.22%) and is testing its previous lows around 1.1150 while EUR/JPY is looking at a 56-pip loss (-0.42%) and has broken below 134.00. Against the comdolls, the euro chalked up larger losses, with EUR/AUD down 110 pips (-0.77%) and EUR/NZD lower by 81 pips (-0.54%).

There’s not much in terms of economic data when it comes to finding an explanation for the euro’s tumble, although the PPI report indicated a worse than expected 0.9% fall in price levels versus the projected 0.5% drop. Other than that, it seems that good ol’ fundamental biases are in play for the euro, as several forex market watchers continue to doubt that Greece is out of the woods.

The U.K. also had its share of strong data, as the construction PMI jumped from 59.1 to 60.1 in February, marking a faster pace of expansion in the industry. BOE Governor Carney’s speech did very little to spur pound movements since he focused more on the ongoing investigations on alleged forex price manipulations of previous central bank staffers.

The Swiss economy wasn’t one to get left behind, as it also posted impressive economic data. The GDP reading for Q4 2014 came in at 0.6%, twice as much as the estimated 0.3% growth figure. This wasn’t enough to stop USD/CHF’s climb to the .9600 major psychological handle though, with the pair up by 26 pips (+0.26%) so far.

Up ahead, the forex calendar shows that it will be a data-light U.S. trading session, with the Canadian monthly GDP as the only major event to watch out for. The economy is expected to show a 0.2% expansion for December, which might add up to a feeble growth reading for Q4 2014. Do watch out for the release of underlying inflation indicators, namely the raw materials price index and the industrial product price index as well.

The coast is clear in terms of top-tier data from the U.S. but that doesn’t mean that the dollar would stand still! As always, be on the lookout for any events or announcements that might influence risk sentiment. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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