London Session Forex Recap – Mar. 11, 2015

  • French Current Account:  -€0.3B vs. -€2B previous
  • U.K. Industrial Production: -0.1% vs. 0.2% forecast, -0.2% previous
  • U.K. Manufacturing Production: -0.5% vs. 0.2% forecast, 0.1% previous

With a light economic calendar in the morning London session, as forex traders continue to price in the ECB quantitative easing (QE) program initiated at the beginning of this week.  With European central banks now buying bonds, along with negative interest rates, the yields are being driven lower and speculators everywhere are moving away from European assets.  And let’s not forget the continued uncertainty with Greece and its fiscal issues.  No euro pair is safe from the sellers, with the biggest movers including the commodity dollars:

EUR/AUD is down 117 pips (-0.84%) to 1.3906, EUR/CAD is down 116 pips (-0.86%) to 1.3455, and EUR/NZD is down 72 pips (-0.49%) to 1.4635

The British pound is seeing mixed price action after posting mixed but weaker economic data earlier in the session.  Sterling is holding its own against the “safe havens” and the euro, but down against the high-yielders with exception to the broadly weak New Zealand dollar:

GBP/JPY is up 32 pips (+0.19%) to 182.82, GBP/CHF is up 72 pips (+0.47%) to 1.5129, and GBP/USD is down only 10 pips (-0.07%) to 1.5054

The forex calendar for the Wednesday afternoon London/morning U.S. session is once again likely to be a snoozer with only one U.S. economic in the lineup. At 6:00 pm GMT, we’ll get the monthly U.S. government budget statement, forecasting a larger deficit in February of around -$187B vs. -$18B previous.  This is a low tier event, so it’s very likely we won’t see a significant market reaction to this number, especially since it comes out near the end of the U.S. trading session where market participation tends to be at a low for the day.

With a lack of major U.S. or Canadian events, that doesn’t mean we should relax because right after the Wednesday session close comes the Reserve Bank of New Zealand‘s monetary policy decision at 8:00 pm GMT. With New Zealand’s relative strength diverging from global weakness, it’s likely we won’t see a change from the RBNZ.

But with so many surprises from central banks this year, a cut isn’t out of the question, which is probably why we’re seeing broad weakness in the Kiwi on the session.  If you do have Kiwi orders or positions on, it’s a good idea to stay on your toes, reduce risk, and be ready for anything including a potential spike in volatility. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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