London Session Forex Recap – June 8, 2015

  • German Industrial Production m/m: 0.9% actual v.s. 0.5% expected, -0.4% previous
  • German Industrial Production y/y: 1.4% actual v.s. 0.9% expected, 0.2% previous
  • German Trade Balance: 22.1B actual v.s. 19.2B expected, 23.1B previous
  • German Current Account: 19.6B actual v.s. 20.3B expected, 27.3B previous
  • French BoF Business Sentiment: 99 actual v.s. 98 previous
  • Euro Zone Sentix Investor Confidence 17.1 actual v.s. 18.7 expected, 19.6 previous

Today’s morning London session was rather subdued. The only noticeable mover was the pound, which got a severe pounding during the forex session due to a slew of pessimistic news.

The pound just couldn’t get a break during today’s morning London forex session. On Sunday, reports came out that more than 50 Conservative Party MPs formed a new pro-Brexit group, going against the wishes of U.K. Prime Minister David Cameron. This, in effect, undermined expectations of unity and stability that a majority government under the Conservative Party was supposed to bring, and made the pound soft against other currencies. Not only that, but Cameron took a hardline approach today, hinting that MPs calling for a Brexit should just quit government. Again, not a positive development. But that’s not the end of the pound’s troubles, forex friends. Moody’s also released a report wherein it was emphasized that the U.K.’s high debt burden was a problem that’s “unlikely to drop before 2017.”

GBP/USD is down by 59 pips (-0.39%) to 1.5228, GBP/JPY is down by 60 pips (-0.32%) to 190.76, GBP/CHF is down by 50 pips (-0.35%) to 1.4318

As for other currencies worth mentioning, there was the euro, which spiked up at the start of the session due to mostly better-than-expected German data before going down again.  The latter move was probably due to the worse-than-expected reading on the Sentix investor confidence index, a survey of about 2,800 investors with regard to their economic outlook for the euro zone. Still, the euro managed to find support again when another round of German bond selling occurred. German 10-year bond yields are currently at 0.868% (+2.35%) from 0.849% earlier.

As for updates to the Greek drama, there weren’t really any major ones. There were some generic ones, such as Greece being ready to negotiate, but we’ve already heard that before. There was also a report that European Commission President Jean-Claude Juncker accused Greek Prime Minister Alexis Tsipras of distorting the creditors’ proposals. Again, not really market-moving news, but it did make the session more interesting.

EUR/USD is up by 2 pips (+0.02%) to 1.1133 from a high of 1.1176, EUR/CAD is up by 13 pips (+0.10%) to 1.3859 from a high of 139.94, EUR/GBP is up by 25 pips (+0.37%) to 0.7305 from a high of 0.7316

The forex calendar for the upcoming afternoon London/morning U.S. session is a bit light, with only Canadian housing data on tap as potential market movers.

At 1:30 pm GMT, forex traders will get Canadian housing starts (185K expected, 183.1K previous) and Canadian building permits (-5.0% expected 11.6% previous). Expectations are mixed, with housing starts increasing slightly while building permits are expected to decrease very drastically; forex traders who are long on the Loonie should watch out for this one. Remember, forex traders have been optimistic on the Loonie ever since the upbeat Canadian jobs data from last week, but potentially downbeat housing sector data may threaten to derail that optimism.

Finally, at 3:00 pm GMT, we’ll be getting the U.S. labor market conditions index (-1.9 previous). This is a composite index which combines the readings of 19 labor market indicators. But it isn’t usually expected to move the markets much since most of the said labor market indicators have already been released. Still, it’s released by the Federal Reserve and is therefore good to know.

As a bonus, Bank of Canada Senior Deputy Governor Carolyn Wilkins is scheduled to speak at the Conference of Montreal. Do watch out for any updates on economic outlook or future monetary policy. Stay frosty!