- Spanish PPI y/y: -1.0% actual v.s. -1.1% expected, -1.3% previous
- Italian Trade Balance: 2.59B actual v.s. 3.58B previous
- France, Germany, Switzerland, and the U.K. are away on holiday
- The U.S. will be observing Memorial Day today
Today’s morning London session was about as fun and exciting as watching paint dry, thanks to most European banks on holiday in observance of Whit Monday. Practically all currency pairs were imprisoned in neat, little ranges for most of the forex trading session. The only exceptions to the yawn fest were the euro and the Swissy, which were both slightly down during the session.
The euro had a couple of low-tier data points for Spain and Italy during the session: Spanish PPI, which is a leading indicator for consumer inflation, was better than expected but still in negative territory while Italy posted a decline in trade surplus versus the previous reading. Again, both indicators are low-tier data and both countries aren’t as significant as let’s say, Germany to the euro zone economy (and Spain’s 23.8% jobless rate is actually kinda bad for the euro zone), so they didn’t really move the markets much, if at all.
The most likely reason for euro weakness, therefore, is still the prevailing Greek drama. To be more specific, the news that Greece does not have any money to pay its debt to the IMF in June likely had the forex traders still around lightening up on euros in the morning session.
EUR/USD is down by 28 pips (-0.25%) to 1.0978, EUR/JPY is down by 44 pips (-0.33%) to 133.32, EUR/AUD is down by 41 pips (-0.29%) to 1.4006
The euro wasn’t the weakest currency of the session, though. That distinction goes to the Swissy. There wasn’t really any catalyst for the Swissy’s broad weakness, so it may just be the currency correlation between the Swissy and the euro due to the close trade relations between Switzerland and the euro zone. It doesn’t really explain why the Swissy was slightly weaker than the euro, though.
USD/CHF is up by 23 pips (+0.25%) to 0.9430, CAD/CHF is up by 15 pips (+0.20%) to 0.7674, EUR/CHF is up by 4 pips (+0.04%) to 1.0354
The forex calendar for the upcoming afternoon London/morning U.S. session indicates that there is a very good chance that the yawn fest will continue since it is practically empty. Also, U.S. bankers and forex traders would be away for Memorial Day, adding to the argument for subdued volatility in the upcoming session.
All is not lost, though. Federal Reserve Governor Stanley Fischer is scheduled to give a speech in Israel. Do note that Fed Chairperson Janet Yellen was a little bit more hawkish on the U.S. economy in her latest speech, confirming what was already stated in the latest FOMC meeting minutes, but with nothing else to go on for the session, forex traders may be keeping an ear out any surprise updates on any potential monetary policy outlook updates.
Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.
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