London Session Forex Recap – Mar. 16, 2015

  • Swiss Retail Sales y/y: -0.3% vs. 1.9% previous
  • Swiss Producer & Import Prices m/m: -1.4% vs. -0.6% previous; y/y at -3.6% vs. -2.7% previous

Forex volatility remained relatively quiet in the morning London session with only Swiss retail sales and PPI data on the calendar as potential catalysts. Both data points came in weaker-than-previous reads, but since these aren’t top tier events, the reaction was muted across Swiss franc pairs. We’ve also got the Swiss National Bank monetary policy statement on Thursday, so it’s unlikely we’ll see any big moves in the Swiss franc before that event anyways.

Looking at the rest of the major currencies, we’re seeing the Greenback continue to remain relatively weak on the session, with the high-yielders on a slow grind higher.  This indicates positive risk sentiment is in play today, especially with European equity markets moving higher on the idea that ECB quantitative easing and a weak euro will draw in more investors to European stocks (German DAX broke 12,000 for the first time to make new all-time highs).  The New Zealand dollar is leading the charge higher against the Greenback, with the euro and British pound not too far behind:

GBP/USD is up 54 pips (+0.37%) to 1.4780, EUR/USD is up 38 pips (+0.37%) to 1.0525, and NZD/USD is up 32 pips (+0.44%) to .7353

The forex calendar for the first afternoon London/morning U.S. session of the week is busier than what we usually see on Mondays with a slew of various U.S. data points.

We’ll start with the Empire State Survey at 12:30 pm GMT, for an index read on the manufacturing industry in New York State.  The forecast is for the read to tick higher to 8 vs. 7.78 previous.

At 1:15 pm GMT, we’ll get the industrial production and capacity utilization numbers for a broader read on the manufacturing industry with both numbers forecasted to come in pretty close to previous reads (0.2% and 79.4% respectively).

To close out the London session, we’ll get the NAHB builders survey for a fresh read on the U.S. housing sector.  The forecast is for an index read of 57 vs. 55 previous, and more often than not, this has been coming in below expectations, signaling a potential slowdown in the housing sector.

And late in the U.S. session at 8:00 pm GMT, we’ll get the Net Long-term TICS flow data for a read on foreign demand of U.S. assets. This is a low tier event and it comes in the sleepy afternoon U.S. session, so it’s likely we won’t see much of a reaction from forex traders.

Overall, volatility may pick up with today’s U.S. data, but it’s unlikely we’ll see big positioning, at least directly related to today’s calendar because of the upcoming Federal Reserve monetary policy meeting. It’ll potentially be a big mover as we may get final hints of  when we’ll see a U.S. rate hike, so traders are unlikely to make big bets until then. And we’ve got ECB President Mario Draghi speaking later today at 6:45 pm GMT in Frankfurt on “The Future of the Finance Industry;” it’s not likely a market mover but definitely something to be aware of.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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