London Session Forex Recap – May 20, 2015

  • German PPI m/m: 0.1% vs. 0.2% forecast, 0.1% previous
  • German PPI y/y: -1.5% vs. -1.4% forecast, -1.7% previous
  • Bank of England Meeting Minutes Released; 9-0 vote to hold main rate at 0.50% and asset purchases to £375B/month
  • Swiss Credit Suisse ZEW Survey: -0.1 vs. -23.2 previous
  • FOMC Meeting Minutes coming up

Today’s morning London session was pretty much subdued ahead of the FOMC minutes. Most currency pairs were locked in tight ranges throughout the session, with pound pairs being the only notable exception.

After lackluster volatility during the Asian session, the pound finally found some buyers after the release of the BoE meeting minutes. The contents of the minutes were for the most part unsurprising since they were largely inline with the recently released BoE inflation report. There was some disagreement on whether or not falling unemployment would “result in some upward pressure on both wages and productivity,” stoking a faster than expected rise in inflation, but that was about it.

The part that probably caught the eyes of pound bulls, though, was this statement: “While there was a range of views over the most likely future path for Bank Rate, all members agreed that it was more likely than not that Bank Rate would rise over the three-year forecast period.” Again, pretty much the same view expressed in the BoE inflation report, but an optimistic view all the same.

GBP/USD is up by 37 pips (+0.24%) to 1.5524, GBP/AUD is up by 47 pips (+0.25%) to 1.9667, GBP/CHF is up by 45 pips (+0.31%) to 1.4587

As for other currencies, there were some news about Greece during the session, such as Greece’s warning that it will not be able to make its June 5 payment to the IMF without a deal, and EU Economic Affairs Commissioner Pierre Moscovici’s statement that a deal is doable but “big gaps remain.” Still, euro pairs were unfazed–they just chillaxed in their tight, little ranges! Some pairs were even slightly up for the session.

EUR/USD is up by 13 pips (+0.12%) to 1.1092, EUR/CHF is up by 18 pips (+0.17%) to 1.0426, EUR/AUD is up by 16 pips (+0.12%) to 1.4058

Forex traders may finally see a pickup in volatility with the release of the FOMC meeting minutes at 7:00 pm GMT.

This is usually a market mover, and a big one at that, so forex traders should really watch out for this event. Just remember that first quarter GDP was disappointingly lower than expected and the same can be said for inflation, so a June rate hike is highly unlikely while a September rate hike may still be in the cards. In any case, make sure to watch out for any change in sentiment or for actual hints on the direction of future monetary policy in the U.S.

Other items on the forex calendar for the upcoming afternoon London/morning U.S. session are the Canadian wholesale sales (0.9% expected, -0.4% previous) number at 1:30 pm GMT and U.S. crude oil inventories (-1.3M expected, -2.2M previous) at 3:30 pm GMT.

It’s worth noting that U.S. crude oil inventories tends to affects the Loonie if there is a currency market reaction due to oil being one of Canada’s major exports to its southern neighbor. As for Canadian wholesale sales, it’s expected to post a positive reading after two straight months in the red, so keep an eye out since a lower-than-expected read may or may not send the Loonie crashing, but a negative reading probably will get forex traders on the sell buttons quickly. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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