London Session Forex Recap – June 2, 2015

  • German Jobless Rate: flat at 6.4% as expected
  • German Unemployment Change: -6K actual v.s. -10K expected, -9K previous
  • U.K. Construction PMI: 55.9 actual v.s. 55.1 expected, 54.2 previous
  • BoE Net Consumer Credit: 1.2B actual v.s. 1.0B expected, 1.3B previous
  • BoE Mortgage Approvals: 68.1K actual v.s. 63.5K expected, 61.3K previous
  • Euro Zone Flash HICP – Core: 0.9% actual v.s. 0.7% expected, 0.6% previous
  • Euro Zone Flash HICP: 0.3% actual v.s. 0.2% expected, 0.0% previous
  • Euro Zone PPI m/m: -0.1% actual v.s. 0.1% expected, 0.2% previous

There were lots of data for the euro and the pound during today’s morning London session, infusing the two currencies with a very welcome surge in volatility. The other currencies, on the other hand, were pretty much subdued during the forex session, with the exception to the Swissy which was riding on the euro’s strength.

The euro finally got some love after being ignored by most forex traders during the Asian session. There were some minor updates on the Greek drama, such as Greece’s submission of a “realistic plan” to exit the crisis although Greece has yet to receive a response or a proposal from the ECB, EU, and IMF leaders after yesterday’s meeting in Berlin. Still, the Greek drama took a back seat as euro bulls began loading up, encouraged by a whole slew of better-than-expected data, especially the surprising jump for both the headline and core harmonized index of consumer prices (HICP) since a jump in inflation usually signals a pickup in economic activity and a potential recovery.

EUR/USD is up by 80 pips (+0.74%) to 1.1031, EUR/JPY is up by 118 pips (+0.87%) to 137.62, EUR/AUD is up by 116 pips (+0.82%) to 1.4341

The pound also got some much needed loving, thanks to a surprisingly better-than-expected read from construction PMI and consumer lending data, hinting at increased economic activity as well as consumer spending and consumer confidence. Looks like the BOE’s forecasts for consumer spending are still on the money, and forex traders were really showing their sentiment during the forex session.

GBP/USD is up by 35 pips (+0.23%) to 1.5252, GBP/CAD is up by 70 pips (+0.37%) to 1.9095, GBP/NZD is up by 118 pips (+0.55%) to 2.1456

Moving on, there weren’t really any direct catalysts to account for Swissy strength during the forex session, so it was most likely just currency correlation again. Interestingly enough, the Swissy was actually losing out to the euro. Usually, the euro loses out (or remains mostly flat) to the Swissy because of the Swissy’s status as a safe haven currency. It’s very strange indeed that forex traders would favor the euro over the Swissy.

USD/CHF is down by 20 pips (-0.22%) to 0.9400, AUD/CHF is down by 31 pips (-0.42%) to 0.7224, EUR/CHF is up by 41 pips (+0.42%) to 1.0360
As for other currencies of note, the Aussie finally managed to calm down after the RBA’s decision to hold rates at 2.0% caused that massive spike during the Asian session. Aussie pairs were ranging slightly downwards during the forex session, with AUD/USD down by 20 pips (-0.27%) to 0.7677.

The forex calendar for the upcoming afternoon London/morning U.S. session is relatively light, with only two mid-tier data on tap: U.S. factory orders (-0.1% expected, 2.1% previous) and U.S. IBD consumer optimism (49.8 expected, 49.7 previous).

Both data points are set for release at 3:00 pm GMT. It is reasonable to assume that forex traders will be looking at factory orders more closely since it is expected to decline, which doesn’t exactly support the Fed’s upward revision for growth.  But don’t ignore the IBD consumer optimism, though, since this survey of about 900 respondents gauges consumer sentiment and consumer spending, and it is expected to tick slightly upwards.

As a bonus, Federal Reserve Governor Lael Brainard is scheduled to speak at the Center for Strategic and International Studies with regard to economic outlook, so keep an ear out for any juicy hints and updates. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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