London Session Forex Recap – Apr. 29, 2015

  • Swiss UBS Consumption Indicator: 1.35 vs. 1.21 previous
  • U.K. Nationwide House Prices (sa): 1.0% vs. 0.2% forecast, 0.1% previous
  • European M3 Money Supply y/y: 4.6% vs. 4.3% forecast, 4.0% previous
  • European Economic Sentiment: 103.7 vs. 103.9 forecast/previous
  • European Consumer Sentiment inline with -4.6% forecast/previous
  • U.K. CBI Distributive Trades: 12% bal vs. 25% bal forecast, 18% bal previous
  • German HICP (Prelim) y/y: 0.3% vs. 0.2% forecast, 0.1% previous

Great day for short-term forex traders in the morning London session as volatility picked up, thanks to a flood of economic events from the European region.

Euro region currencies were the big winners of the day, likely on the slew of economic data mostly showing positive reads.  There’s too many data points to go over, but the likely drivers for strength in the euro, British pound and Swiss franc could be the better-than-expected reads in the UBS consumption indicator index (private consumer related consumption data), the M3 Money supply increase (inline with positive loan growth in the euro zone), and the tick higher in the annualized German inflation data. And the British pound may be taking its cues from David Cameron who pledged that if the Conservatives win, they promise to introduce a law banning income tax, VAT or national insurance increases. Surely a potential economic boost and who wouldn’t vote for that?

The Swiss franc seems to be the biggest gainer on the session, reversing yesterday’s big losses, but the euro and Sterling are not too far behind, all turning around their Asia session weakness.

USD/CHF is down 11 pips (-0.12%) to .9536, CAD/CHF is down 25 pips (-0.31%) to 98.86, and GBP/CHF is breakeven at 1.4649 after trading as high as 1.4705 on the session.

Without a direct catalyst, the Japanese yen took a big turn from green into the red zone to be the biggest loser among the majors, possibly on the positive Euro region data giving risk sentiment a positive boost.

USD/JPY is up 39 pips (+0.33%) to 119.21, EUR/JPY is up 79 pips (+0.61%) to 131.25, CHF/JPY is up 75 pips (+0.63%) to 125.13

The forex calendar for the Wednesday afternoon London/morning U.S. session is set to explode with volatility thanks to top tier events coming from the U.S., as well as some low-to-mid tier events from both the U.S. and Canada to keep price action interesting.

At 1:30 pm GMT, it’s a big bag of data that includes industrial product price index (-0.1% forecast vs. 1.8% previous) and raw materials price index data (-2.0% forecast vs. 6.1% previous)from Canada, and from the U.S. is the likely market mover of the hour, the first estimate of the quarterly U.S. GDP and Price Index reports.

The U.S. GDP data (1% forecast vs. 2.2% previous) is a broad read on the health of the U.S. economy over the course of the last three months and it’s closely watched by the Fed. I think the chances are high that we will see volatility rise, but it may be short-lived since it they are not the most significant event of the session.

At 3:00 pm GMT, we’ll get the monthly U.S. pending home sales data, forecast to come in at 1% vs. 3.1% previous. This is not likely to make waves without a big surprise but we should still be aware because housing is still a big component of the U.S. economy.

And probably the biggest event of the week is coming at 7:00 pm GMT in the form of the latest U.S. monetary policy decision by the Federal Open Market Committee. The forecast is for the Fed funds rate to stay at 0.25%, but the real potential comes from what the Fed may say in their released statement on the future outlook of interest rates.  The Fed is probably the most powerful central bank in the world, so this is definitely a market mover and one to definitely put your risk management hat on tight.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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