London Session Forex Recap – Mar. 19, 2015

  • Swiss Trade Balance: CHF 2.47B vs. CHF 3.41B previous
  • Swiss National Bank holds Libor rate at -0.75% as expected
  • European Labour Cost Q4: 1.1% vs. 1.4% previous
  • European Targeted LTRO: €97.80B vs. €129.84B previous

Greenback bulls continued to gain back the losses ignited by yesterday’s FOMC monetary policy statement in the morning London session, nearly making a full recovery from the wild volatility.  With no direct catalysts, it’s likely that the mixed message on when we’ll see an interest rate hike from Janet Yellen has already faded and forex traders are back to pricing in the idea the U.S. will raise rates while the rest of the world keeps easy money policies alive to combat slowing growth.

EUR/USD is down 170 pips (-1.55%) to 1.0690, USD/JPY is up 51 pips (+0.43%) to 120.60, and USD/CAD is up 121 pips (+0.97%) to 1.2680

After rallying earlier this week on improving European data, the euro resumes the longer-term downtrend, likely a reaction to the disappointing labour costs data and the return of U.S. dollar bulls.  Of course, Greek debt drama and ECB quantitative easing are still big picture driving themes, so it’s likely the pullback this week was seen as an opportunity to jump in the downtrend, especially after the FOMC induced bounce. All euro pairs are lower on the session, but momentum has slowed going into U.S. trade:

EUR/JPY is down 145 pips (-1.12%) to 128.94, and EUR/GBP is down 72 pips (-1.00%) to .7179, EUR/NZD is down 82 pips (-0.57%) to 1.4425

Swiss franc saw a rare spike in volatility on today’s Swiss National Bank monetary policy decision.  No changes were made, but the franc gains some ground against the majors, possibly on a “buy-the-rumor, sell-the-news” response from the markets as economists were expecting a weak outlook on the economy in the short-term thanks to the extreme rise in value of the Swiss franc. Overall, even with the bullish reaction, the Swiss franc remains down against most majors as this morning’s market stories are likely the main drivers:

USD/CHF is up 126 pips (+1.30%) to .9897, GBP/CHF is up 108 pip s(+0.74%) to 1.4749, and EUR/CHF is down 42 pips (-0.40%) to 1.0592

The forex calendar for the Thursday afternoon London/morning U.S. session is laced with various U.S. economic reports to hopefully keep the volatility going for Dollar traders.

At 12:30 pm GMT, we’ll get the U.S. current account (-$104.1B forecast vs. -$100.3B previous) and weekly initial jobless claims data (293K forecast vs. 289K previous). Both are mid-tier events and won’t likely spark big moves without a big surprise.

At 2:00 pm GMT, we’ll get the Philadelphia Fed survey (7 forecast vs. 5.2 previous) and leading indicator data (0.2% forecast/previous). The Philly Fed survey is the likely market mover and with the data trend moving lower, we could possibly see a catalyst to slow down the Greenback rally.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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