London Session Forex Recap – Apr. 21, 2015

  • German ZEW Economic Sentiment: 53.3 vs. 55.3 forecasts, 54.8 previous
  • German ZEW Current Conditions: 70.2 vs. 56.5 forecast, 55.1 previous
  • European ZEW Economic Sentiment: 64.8 vs. 62.4

Volatility picked up in the morning London session, and it was another bad day for the euro as forex traders priced in a move potentially in the works by the European Central Bank (ECB) to limit Emergency Liquidity Assistance to Greek banks.  While this new development has not been officially discussed by the Governing Council (and saw a bit of clarity later in the session that signaled no cutoff for now), it’s certainly a bad sign for Greece, who is running out of cash to keep the country afloat.

The earlier news sent the euro into a renewed move to the downside against the majors but eventually steadies, possibly with the help of a the positive German ZEW current conditions read and European ZEW economic sentiment read (but the future outlook took a slight turn to the downside). The euro continues to remain in the red for the session but has stabilized at the moment:

EUR/USD is down 53 pips (-0.50%) to 1.0683, EUR/JPY is down 30 pips (-0.23%) to 127.60, and EUR/AUD is down 67 pips (-0.49%) to 1.3831

The other move of note on the session is the sudden rally in the Aussie and Kiwi.  Despite another hint of a rate cut by the RBA, both currencies went into bull mode, roughly at the same time as the news of the ECB potentially working on limits to the ELA for Greek banks.  Did Greek fears drive euro bulls out an into the comdolls? Or does the reserve ratio cut by the People’s Bank of China continue to support a positive turn for economies in the Asian region, including Australia and New Zealand? I can’t say for sure, but whatever the case may be, the Aussie and Kiwi ripped higher in morning London trade to gain back the early Tuesday losses:

AUD/USD is up 10 pips (+0.13%) to .7733 after hitting lows around .7683, NZD/USD is up 43 pips (+0.57%) to .7698 after hitting Asia session lows around .7635

The forex calendar for the Tuesday afternoon London/morning U.S. session is near empty with the only economic data point coming from Canada.  At 1:30 pm GMT, we’ll get the wholesale sales data to give us a read on the health of retailers, with a forecast of 0.2% vs. -3.1% previous.

Last month’s read was the biggest drop in six years, so it’ll be interesting to see if we’ll get a bounce back in what has been a volatile number as of late.  It should be a market mover for the Loonie, so be aware if you have any open orders or positions in any Canadian dollar pairs.

With little to go on for the rest of the session, forex traders may take cues from U.S. equity market sentiment (U.S. futures are pointing to a higher open as weak earnings worries fade) and/or a continued focus on the strong trends in the Aussie, Kiwi, and euro sparked earlier in today’s trade. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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