London Session Forex Recap – Mar. 9, 2015

  • German Current Account: 16.8B EUR vs. 15B EUR forecast, 25.3B EUR previous
  • German Trade Balance: 15.9B EUR  vs. 20B EUR forecast, 18.9B EUR previous
  • French BoF Business Sentiment: 96 vs. 98 forecast/previous
  • European Sentix Indicator: 18.6 vs. 15 forecast, 12.4 previous

Forex price action was mostly quiet but with a slight risk-on bias in the morning London session, likely on news that the ECB bond purchasing program has begun.  According to Bloomberg, the European Central Bank started by buying German and Italian government bonds, sending bond yields lower to create a more risk-on friendly environment.

We’re seeing this in the currency markets as higher-yielding currencies are on the way up against the low-yielders (e.g., Japanese yen and U.S. dollar), and the euro and British pound are bouncing back from big sell offs over the past few weeks.  Overall, we’re seeing the biggest moves in the Japanese yen pairs as forex traders step away from the safe haven plays:

EUR/JPY is up 67 pips (+0.51%) to 131.52, GBP/JPY is up 121 pips (+0.66%) to 182.77, and NZD/JPY is up 46 pips (+0.53%) to 89.17

The forex calendar for the Monday afternoon London/morning U.S. session is nearly empty with only a couple of low tier economic data points in the lineup.

At 1:15 pm GMT, we’ll get the Canadian housing starts data for an annualized read on new homes being created in Canada. This number has been on a downtrend since hitting 200K back in August 2014, but the March releases over the past few years tends to be a turning point from the slow winter months. With a lack of any other catalysts, this could be a short-term market mover for the Loonie.

At 2:00 pm GMT, we’ll get the Labor Market Conditions Index, which is an indicator from the Federal Reserve incorporating 19 labor market indicators to assess the change in labor market conditions.  Given the positive surprise from last Friday’s Non-farm payrolls report, it’s likely we’ll see an uptick from the previous index read of 4.9, but the reaction may be very brief as this is still a low tier event.

Without big catalysts, it’s likely forex traders will look to the U.S. markets for risk sentiment cues, and with general consensus that the Fed will raise rates this year, it may be a risk-off type of session as the markets price in future increases to borrow costs. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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