London Session Forex Recap – Apr. 17, 2015

  • Swiss Retail Sales y/y: -2.7% vs. -0.3% previous
  • European Current Account: €26.4B vs. €30.4B previous
  • U.K. Claimant Count Rate: 2.3% vs. 2.3% forecast, 2.4% previous
  • U.K. ILO Unemployment Rate: 5.6% vs. 5.6 forecast, 5.7% previous
  • U.K. Claimant Count Change: -20.7K vs. -29.5K forecast, -31K previous
  • European HICP m/m: 1.1% vs. 1.1% forecast, 0.6% previous; y/y at -0.1% vs. -0.1% forecast/previous

The U.K. unemployment data was the forex headliner in London trade after posting mixed numbers, but it seems that the unemployment rate and total number of claimant counts (hitting a low level not seen since 1975) was the main focus of the session. The downtick in the unemployment rate and claimant count numbers was enough to ignore the weaker-than-expected claimant count change and average earnings numbers, so I guess as more people have jobs it doesn’t matter that their pay is going down?

Of course, that’s just a guess, but what’s not a guess is the broad move higher in the British pound after the news. Although it seems that Sterling pairs didn’t manage to get far before being capped, with some pairs even giving back some of the gains on the session:

GBPUSD is up 87 pips (+0.60%) to 1.5017, GBP/JPY is up 59 pips (+0.33%) to 178.26, and GBP/AUD is up 75 pips (+0.40%) to 1.9208

The volatility didn’t end with Sterling as the euro saw a pick up in its own price action, but of the choppy sort, possibly sparked by a combination of the downtick in the European current account data and better-than-expected European HICP data.  EUR/USD hit lows around 1.0740 before rallying and nearly testing 1.0850 ahead of the U.S. trading session. EUR/JPY also traded in a wide range, hitting lows around 127.74 in Asia before testing 128.73 in European trade.

And the USD sell off seems to haven’t lost its legs, and without any direct catalysts that I can make out, this week’s weak U.S. data (retail sales, PPI, retail sales, and housing data) continues to push the Greenback lower in London trade. After an early Asia rally, the Dollar is lower on the session but seems to be taking back some its losses going into the U.S. session:

USD/JPY is down 23 pips (-0.20%) to 118.73, USD/CHF is down 35 pips (-0.37%) to .9522, and AUD/USD is up 10 pips (+0.12%) to .7810, all pair settling after a very choppy session.

The forex calendar for the Friday afternoon London/morning U.S. session is looking good for volatility to pick up with a slew of mid-to-top tier events from both Canada and the U.S., including the closely watched consumer price inflation data.

We’ll get the bulk of the data at 13:30 pm GMT with Canadian retail sales (headline 0.5% forecast vs. -1.7% previous), as well as consumer price index data from Canadian (headline m/m 0.6% forecast vs. 0.9% previous) and the U.S. (headline m/m  0.3% forecast vs. 0.2% previous).  These are all top tier events, so there’s a highly probability that we will get a nice spike in volatility, especially if we get more positive reads to show that world is finally stabilizing from the falling inflation environment since last year.

And we’ll close out the week’s forex calendar with the University of Michigan (UoM) sentiment survey (94 forecast vs. 93 previous) and monthly Conference Board leading indicator data (0.3% forecast vs. 0.2% previous). The UoM sentiment index (economic conditions based on a survey of 500 consumers) is the likely market mover between the two, and since it’s the preliminary number, it’ll have a bit more punch than the following revisions.

Also pay attention to possible risk sentiment influences on the currency markets as the equity markets sold off on Friday, possibly on Chinese regulators clamping down on the use of shadow financing to buy equities. I’m not sure if this is also the catalyst for the European markets, but they are down on the day along with the U.S. futures markets. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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