London Session Forex Recap – Apr. 27, 2015

  • German Import Price Index m/m: 1% vs. 0.4% forecast, 1.4% previous
  • German Import Price Index y/y: -1.4% vs. -2.0% forecast, -3.0% previous
  • U.K. CBI Industrial Trends: 1% bal vs. 4% bal forecast, 0% bal previous

Volatility briefly picked up at the London session open, but it’s been mostly choppy price action for the forex market on a light economic calendar.

The first mover on the session was the euro, seeing short-term buying after Germany posted better-than-expected import price data. The shared currency managed to make gains for the next hour, but unfortunately ran out of steam and quickly reversed its gains.  There doesn’t seem to be a direct catalyst for the selling pressure, so I assume the bears simply took the rally as an opportunity to play the lingering Greek debt story (still no deal for more bailout funds after the Eurogroup meeting). The euro is slightly down on the session, but overall mixed against the majors:

EUR/USD is down 30 pips (-0.28%) to 1.0834, EUR/JPY is up 3 pips (+0.03%) to 129.29, and EUR/CAD is down 59 pips (-0.45%) to 1.3180

The British pound started feeling its pain right from the London open, possibly in anticipation of the weaker-than-expected CBI industrial trends data, or uncertainty rising as we get closer to the U.K. Parliamentary elections on May 7. Whatever the case may be, it’s a sea of red for Sterling with strong momentum heading into U.S. trade:

GBP/USD is down 70 pips (-0.46%) to 1.5114, GBP/USD is down 23 pips (-0.13%) to 180.35, and GBP/AUD is down 51 pips (-0.27%) to 1.9354

The other currency moves of note are the continued strength in the comdolls, especially the Canadian.  Without a direct catalyst, the Loonie is probably the strongest among the majors, up even against the Greenback which seems to be finding a bid (also without a direct catalyst): USD/CAD is down 18 pips (-0.16%) to 1.2160.

And finally, the Japanese yen is taking a hit on the session, possibly on the downgrade of Japanese debt to A (five notches below the top “AAA” rating) by Fitch Ratings.  Overall, yen pairs are broadly higher on the session, but the gains seem to be limited for now:

USD/JPY is up 42 pips (+0.36%) to 119.33, NZD/JPY is up 39 pips (+0.43%) to 90.64, and AUD/JPY is up 29 pips (+0.32%) to 93.22

The forex calendar for the Monday afternoon London/morning U.S. session is void of any economic events for catalysts, which means forex traders could take their cues for volatility from the U.S. equity market.  U.S. companies are currently in the middle of their earnings season, which tends to bring higher levels of volatility on both surprises of company health and company outlooks for the economy.

Technical levels can also play a role in influencing price action, but with a heavy economic calendar this week ahead of us, there’s a good chance currency traders may continue to sit on their hands and prepare for the pick up in volatility that is likely to come in the days ahead filled with central bank monetary policy decisions, GDP, PMI and more…Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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