London Session Forex Recap – May 29, 2015

  • German Retail Sales m/m 1.7% actual v.s. 1.0% expected, -1.4% previous
  • French PPI m/m: -0.4 actual v.s. 0 previous
  • Italian CPI m/m: 0.2% actual v.s. 0.1% expected, 0.2% previous
  • Spanish CPI y/y: -0.2% actual v.s. -0.5% expected, -0.6% previous
  • Spanish HICP y/y: -0.3% actual v.s. -0.6% expected, -0.7% previous
  • Swiss GDP q/q: -0.2% actual v.s. 0.0% expected, 0.5% previous
  • Swiss KOF Leading Indicator: 93.1 actual v.s. 89.9 expected, 89.9 previous
  • Euro Zone M3 Money Supply y/y: 5.3% actual v.s. 4.9% expected, 4.6% previous
  • U.S. and Canadian GDP readings coming up

The spotlight was on the euro during today’s morning London session thanks to a long list of mostly better-than-expected data from the euro zone countries; strong across the board during the forex session, losing out only to the Swissy. The euro’s strength was probably caused by a barrage of mostly better-than-expected data for Germany, Italy, and Spain.

As for updates to the Greek drama, there were only a few minor ones, such as Greek bank deposits falling to the lowest level in a decade and some governments allegedly blaming the ECB for the slow progress with the Greek talks. Again, just some minor news and not enough to curb the optimism generated by the better-than-expected data points. Although there was also a positive report that Varoufakis and Greece’s creditors have reached an agreement on some issues, especially the numbers.

EUR/USD is up by 50 pips (+0.46%) to 1.0980, EUR/GBP is up by 49 pips (+0.68%) to 0.7194, EUR/JPY is up by 36 pips (+0.27%) to 135.97

The Swissy was pretty strong too, which is baffling, because Swiss GDP showed a contraction but this was tempered a bit by the KOF Leading Indicator rising more than expected. To newbies out there, the aforementioned indicator is a composite of about 219 economic indicators and is meant to predict the overall direction of the economy in the next few months. Moving on, currency correlation would also be in play, with the strong euro dragging the Swissy along due to their close trade relations, but with the Swissy finally pulling in more buyers because of its safe haven status.

USD/CHF is down by 58 pips (-0.62%) to 0.9422, EUR/CHF is down by 33 pips (-0.32%) to 1.0318, GBP/CHF is down by 132 pips (-0.91%) to 1.4356

The pound, meanwhile, extended its losses after the poor reading for revised GDP yesterday. There were no direct catalysts during the session, so it was most likely just counter currency action and capital flow, with capital flowing to the euro and the Swissy at the expense of the soft pound.

GBP/USD is down by 52 pips (-0.34%) to 1.5246, GBP/CAD is down by 61 pips (-0.32%) to 1.8971, GBP/JPY is down by 70 pips (-0.37%) to 188.83

Greenback pairs, meanwhile, were mostly range-bound. The subdued volatility for Greenback and Loonie pairs is probably due to forex traders sitting on their hands ahead of GDP data for Canada and the U.S. later.

The forex calendar for the upcoming afternoon London/morning U.S. session is bound to be a very interesting one, with Canadian GDP and U.S. GDP being pitted against each other. Forex traders with positions in USD/CAD should really watch out!

The main event is at 1:30 pm GMT when Canadian GDP q/q (0.3% expected, 2.4% previous) and U.S. GDP q/q (-0.9% expected, 0.2% previous) are simultaneously released together with U.S. core PCE price index (0.9 expected, 0.9 previous). Time to see if the central banks of the respective countries are right about their forecasts. Do recall that both the Fed and the BOC are optimistic for their respective economics, but also recall that Canada is dependent on U.S. economic growth. This will certainly be very interesting to observe.

Next, at 2:45 pm GMT, forex traders will  have the Chicago PMI (53.0 expected, 52.3 previous). This is a survey of around 200 purchasing managers and is a leading indicator of productivity and overall economic health. It’s expected to improve for the 3 consecutive month after taking a dive back in February so forex traders should watch for this one.
Finally, at 3:00 pm GMT, we will be having the University of Michigan consumer sentiment (89.5 expected, 88.6 previous), a survey of about 400 consumers with regard to economic conditions. It is expected to improve, so watch out for any surprises.

See also:

Asia Session Recap

U.S. Session Recap

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