London Session Forex Recap – June 5, 2015

  • German Factory Orders m/m: 1.4% actual v.s. 0.5% expected, 1.1% previous
  • French Trade Balance: -3.01B actual v.s. -3.95B expected, -4.41B previous
  • Spanish Industrial Production: 1.8% actual v.s. 1.5% expected, 3.2% previous
  • Swiss Foreign Currency Reserves: 517.5B actual v.s. 522.2B previous
  • U.K. Consumer Inflation Expectations: 2.2% actual v.s. 1.9% previous
  • NFP report coming up

It’s NFP Friday, fellow forex traders! And as usual on NFP day, most currency pairs were pretty well-behaved ahead of the monster monthly report, milling about in neat, little ranges. Although it must be pointed out that the Greenback–the prime beneficiary (or victim) of the NFP report–was misbehaving by crawling up ever higher during the morning London session. Another misbehaving currency was the euro, which was also inching its way higher during the forex session before taking a tumble near the end.

Moving forward, there weren’t any direct catalysts to account for the Greenback’s strength during the forex session, but it’s natural to assume that it was just forex traders taking pre-emptive positions ahead of the upcoming data. It’s NFP Friday, after all.

USD/CAD is up by 28 pips (+0.23%) to 1.2523, USD/JPY is up by 33 pips (+0.27%) to 124.79, USD/CHF is up by 25 pips (+0.27%) to 0.9342

As for the euro, it got a string of better-than-expected reads for various data points that gave it a nice boost at the start of the session before stabilizing and then slowly going back down, thanks probably to shrinking German bund yields as investors and traders began loading up on bunds ahead of the NFP report. German 10-year bund yields are currently at 0.866%, down from 0.912% earlier.

As for updates on the Greek drama, there wasn’t really much after Greece opted to bundle its IMF payment into a single sum that is due by June 30. There were some news about another potential deadlock, with Greece refusing a cash-for-reform proposal. On second thought, that last news item could have also been a reason for the euro’s pause and subsequent decline during the forex session.

EUR/USD is down by 24 pips (-0.22%) to 1.1221 from a high of 1.1278, EUR/CAD is down by 3 pips (-0.02%) to 1.4050 from a high of 1.4122, EUR/JPY is up by 7 pips (+0.06%) to 140.06 from a high of 140.68

It’s NFP friday so we’ve got a very, very heavy forex calendar for the upcoming afternoon London/morning U.S. session. Better gear up, forex traders.

Forex traders can expect to start the session hard and fast at 1:30 pm GMT, with a jobs data dump for the U.S. and Canada, including the market-moving U.S. NFP.  So Loonie and Greenback traders beware, especially those who already have positions in USD/CAD.

For the U.S., we got U.S. non-farm payrolls (226K expected, 223K previous), the jobless rate, which is expected to remain flat at 5.4%, and U.S. average hourly earnings (0.2% expected, 0.1% previous).

For Canada, we’ve got Canadian employment change (10.0k expected, -19.7K previous), the jobless rate, which is also expected to remain flat at 6.8%, and Canadian labor productivity (-0.2 expected, -0.1% previous).

Based on data expectations, U.S. data is likely to be better off than Canadian data, but watch out for any surprises. And for non-farm payrolls or NFP, do remember that the actual reading for ADP showed 201K new jobs, which is slightly above the 200K consensus, and a significant improvement over the previous reading which was downgraded to 165K from 169K. And as explained in Forex Gump’s NFP Forex Trading Guide, the ADP estimate usually acts as a leading indicator for NFP.

As a dessert, forex traders will get the U.S. consumer credit (16.0B expected, 20.52B previous) at 8:00 pm GMT. But before that, at 7:30 pm GMT, Federal Reserve Bank of New York President William Dudley is scheduled to speak at the Economic Club of Minnesota. He will be talking about the U.S. monetary policy and economic outlook. Given the topic, there’s a good chance for a juicy update so make sure to tune. Stay frosty!