London Session Forex Recap – Mar. 13, 2015

  • German Wholesale Price Index m/m: 0.5% vs. -0.4% previous; y/y at -2.1% forecast vs. -2.6% previous
  • U.K. Construction Output m/m: -2.6% vs. 1.3% forecast, 0.4% previous; y/y at -3.1% vs. 2.1% forecast, 5.3% previous

Despite a light forex calendar, volatility picked up in the morning London session with mostly choppy price action and a broad U.S. dollar bounce as the main move of the morning.  There doesn’t seem to be a direct catalyst for the return of USD bulls, so it’s likely the profit taking and bearish reaction to yesterday’s U.S. retail sales data may already come to an end and forex traders are back to pricing in a potential Fed rate hike this year. Whatever the case may be, is up across the board on the Friday session with momentum still in its favor going into U.S. trade:

USD/JPY is up 17 pips (+0.15%) to 121.45, EUR/USD is down 51 pips (-0.49%) to 1.0582, and AUD/USD is down 57 pips (-0.75%) to .7648

Euro pairs are mixed on the session as their moves seem to be influenced by their counter currency stories, and despite better than expected German wholesale prices data and likely on continued uncertainty on Greece’s future place within the euro.

EUR/USD is down 67 pips (-0.63%) to 1.0566, EUR/JPY is down 61 pips (-0.48%) to 128.34, and EUR/NZD is up 22 pips (+0.17%) to 1.4414

And the British pound is also mixed against the majors on the session after weak construction data, down against the Greenback and Japanese yen, but up against the Asia comdolls, who are likely lower because of USD strength:

GBP/AUD is up 58 pips (+0.31%) to 1.9361, GBP/JPY is down 67 pips (-0.37%) to 179.82, and GBP/USD is down 74 pips (-0.50%) to 1.4806

The forex calendar for the Friday afternoon London/morning U.S. session is light but has a couple of potentially explosive economic events for both the U.S. and Canadian dollar.

At 12:30 pm GMT, we’ll get the monthly reads on U.S. producer price index (PPI) data (0.3% forecast vs. -0.8% previous and the monthly Canadian employment data (-5K forecast vs. 35.4K previous). Reads on both inflation (PPI) and the employment sector are important measurements of the health of an economy, so it’s we’ll see a big pickup in volatility for both the Greenback and the Loonie, and especially in the USD/CAD market. USD/CAD has been generally strong all week, so look for the sentiment likely to continue IF we see the forecast numbers come to fruition.

At 2:00 pm GMT, we’ll get the preliminary University of Michigan Sentiment survey data (95.5 forecast vs. 95.4 previous).  With a slight tick higher in the forecast, this could help boost the broad positive USD sentiment we’ve been seeing going into the end of the London trading session, but don’t expect a big reaction because this is a mid-tier event.

See also:

Asia Session Recap

U.S. Session Recap

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