London Session Forex Recap – Apr. 16, 2015

  • Swiss Producer & Import Prices y/y: -3.4% vs. -3.7% forecast, -3.6% previous
  • Swiss Producer & Import Prices m/m: 0.2% vs. -1.4% previous

After an early London session drop, the euro drew in a strong supply of buyers, likely on the release of the European Central Bank’s latest forecast on growth and inflation for the second quarter.  While inflation was revised lower for 2015, the ECB expects a move higher in 2016 and 2017, and growth expectations are revised up to 1.4% (vs. 1.1% previous) in 2015 and 1.7% (vs. 1.5%) in 2016.

The price action in euro pairs is pretty much mixed on the session, but we are seeing a big bounce higher up from session lows: After hitting lows around 1.0625 in early London trade, EUR/USD shot higher to test 1.0740. EUR/JPY is testing the 127.60 area after hitting lows 126.73.

The Swiss franc caught the eyes of forex traders early in the session thanks to positive inflation data, with the monthly read actually coming in positive for the first time since August 2014. No breakdown of the PPI numbers that I can find yet, but it definitely adds more fuel to the argument that we are seeing a positive turn around in the European region.  The reaction was actually bearish, but the franc seems to have found its feet heading into the U.S. session and now mixed among the majors:

USD/CHF is down 25 pips (-0.29%) to .9613, GBP/CHF is up 39 pips (+0.28%) to 1.4349, and EUR/CHF is up 30 pips (+0.29%) to 1.0328

And the last move of note is the broad selloff in the Greenback.  There doesn’t seem to be a direct catalyst that I can see, so it’s likely that a combination of the positive ECB forecast, the positive Aussie jobs, and maybe even the rise in oil prices on U.S. output reduction could be contributing to growing sentiment that the situation around the globe may be improving, and that there’s less of a need to be in safe haven assets.  Whatever the case may be, the U.S. dollar is taking a big hit on the session after hitting Thursday highs in early London trade:

AUD/USD is up 96 pips (+1.27%) to .7771, GBP/USD is up 73 pips (+0.49%) to 1.4912, and NZD/USD is up 50 pips (+0.66%) to .7633

The forex calendar for Thursday afternoon London/morning U.S. session is U.S. focused and covers a wide array of U.S. sectors to hopefully get the Greenback going after a lackluster morning London session.

At 13:30 pm GMT, we’ll get a bulk of the U.S. data including the weekly initial jobless claims (280K forecast vs. 281K previous) for a fresh read on the employment sector, and an update on the housing market with housing starts (1.04M forecast vs. 0.90M previous) and building permits data (1.08M forecast vs. 1.10M previous). These are mid-tier events that do not usually spark big market movements unless see we a big deviation from the forecast/previous reads.  The housing data may be the ones to watch among the group if the housing starts number doesn’t return back to above 1.0M.

At 3:00 pm GMT, we’ll get the Philadelphia Fed survey for a read on manufacturing conditions in the Philly Federal Reserve district.  The forecast is for a tick higher to 6 vs. 5 previous, staying within the recent low range after hitting as high as 40.8 back in November.  This is considered a top tier mover, so let’s see if it can improve and start to crawl it’s way back to double digit reads.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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