London Session Forex Recap – Apr. 8, 2015

  • German Factory Orders m/m: -0.9% vs. 1.5% forecast, -2.6% previous
  • French Trade Balance -€3.45B vs. -€3.8B forecast, -€3.71B previous
  • Swiss CPI m/m: 0.3% vs. 0.1% forecast, -0.3% previous
  • Swiss HICP m/m: 0.5% vs. 0.1% forecast, -0.4% previous
  • European Retail Trade m/m: -0.2% vs. -0.2% forecast, 0.9% previous

It looks like the bullish euro sentiment we’ve seen lately is out the window in the morning London session, likely on today’s weaker-than-expected German factory orders data.  It was the biggest drop since Aug. 2009, supporting current and potentially bigger future easing measures. The selling began right from the release of the data, and may have been helped along by the European retail trade data, inline with forecasts but much lower than previous.  The euro is down across the board (with exception to the Greenback), and  momentum still in favor of the sellers:

EUR/USD is up 32 pips (+0.30%) to 1.0845, EUR/GBP is down 34 pips (-0.46%) to .7267, and down the biggest against the Kiwi with EUR/NZD down 96 pips (-0.67%) to 1.4322.

The Greenback is seeing red on the session, possibly due to the market anticipating bearish comments from the upcoming FOMC meeting minutes in the U.S. trading session. With recent U.S. data weakening and the Fed signaling patience in beginning to normalize, its likely we’ll get comments to support a later rather than sooner interest rate hike in the U.S.

USD/JPY is down 35 pips (-0.30%) to 119.84, GBP/USD is up 118 pips (+0.80%) to 1.4924, and AUD/USD is up 72 pips (+0.94%) to .7703

And finally, the British pound is finding buyers in the morning session, and without a direct catalyst, this demand could be on the news of the buyout of BG Group by Royal Dutch Shell for £47B in cash and shares.  Larger Mergers and Acquisition (M&A) activity can have an affect on the currency markets as capital needs to flow in order to get the deals done, which is what we may be seeing here. Whether it is the M&A deal or something else, Sterling is broadly higher on the session:

GBP/JPY is up 91 pips (+0.51%) to 178.95, GBP/CHF is up 66 pips (+0.47%) to 1.4370, GBP/CAD is up 49 pips (+0.27%) to 1.8564

The forex calendar for the Wednesday afternoon London/morning U.S. session is lacking in terms of fresh economic data, but we do have the FOMC meeting minutes being released at 7:00 pm GMT.  Since there was a press conference after the most recent meeting (Mar. 18th), it’s highly unlikely that we’ll get any new insights from the meeting minutes.  But of course, as with any other Fed event, if there is anything not previously mentioned in the statement or press conference, then volatility could spike in the thin afternoon U.S. trading session.  Be ready and stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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