London Session Forex Recap – June 11, 2015

  • French CPI m/m: 0.2% actual v.s. 0.2% expected, 0.1% previous
  • French CPI y/y: 0.3% actual v.s. 0.3% expected, 0.1% previous
  • French HICP m/m: 0.2% actual v.s. 0.2% expected, 0.1% previous
  • French HICP y/y: 0.3% actual v.s. 0.3% expected, 0.1% previous
  • Chinese New Yuan Loans: 0.90T v.s.0.85T expected, 0.71T previous
  • U.S. retail sales coming up

It was a peaceful morning London forex session, with most currency pairs blissfully wiggling about in tight, little ranges ahead of U.S. data later. The only disturbers of the peace were the Greenback and the pound, since they were both broadly up for the forex session.

The Greenback was on the attack throughout most of the session, grinding ever higher against most other pairs. There weren’t really any direct catalysts to account for the Greenback’s strength during the session, so it was most likely just pre-emptive positioning ahead of U.S. data later.

U.S. headline and retail sales, in particular, are in focus since that are expected to improve and would be a welcome addition to the better-than-expected NFP reading from last week.

USD/CAD is up by 30 pips (+0.25%) to 1.2312, USD/JPY is up by 47 pips (+0.38%) to 123.68, USD/CHF is up by 46 pips (+0.50%) to 0.9358,

The pound’s strength also had no direct catalysts for the forex session. There weren’t any economic data reports or major news updates during the session. It’s quite possible that  the pound got a boost from the equity markets since the FTSE 100 is currently up by 0.44% to 6,860.80. Well, whatever the case may be, the fact remains that the pound was strong for the session.

GBP/USD is up by 6 pips (+0.04%) to 1.5469, GBP/AUD is up by 78 pips (+0.40%) to 2.0002, GBP/JPY is up by 71 pips (+0.38%) to 191.26

As for other currencies of note, first is the Kiwi, which has stabilized after that free fall caused by the unexpected Reserve Bank of New Zealand rate cut from earlier, with NZD/USD down by 6 pips (-0.09%) to 0.7009.

Another currency worth noting is the euro. It was mixed for the forex session, but mostly down despite positive developments from French inflation data. There were also positive developments in the Greek drama, such as Greece agreeing to be more cooperative, according to German Chancellor Angela Merkel. And still, the euro didn’t react positively.

With no other catalyst, the most likely reason for the euro weakness during the session was the bond buying that took place; German 10-year bond yields are currently down by 6.77% to 0.923% for the session.

EUR/USD is down by 47 pips (-0.42%) to 1.1250, EUR/CAD is down by 24 pips (-0.18%) to 1.3849, EUR/GBP is down by 30 pips (-0.42%) to 0.7274

Okay, we’ve got a lot of data lined up for the upcoming afternoon London/morning U.S. session’s forex calendar, so I’ll just point out the most important ones.

We’ll get a data dump at 1:30 pm GMT, with U.S. headline retail sales (1.2 expected, 0.0 previous), U.S. core retail sales (0.8 expected, 0.1 previous), U.S. initial claims (275K expected, 276K previous), U.S. import prices (0.9% expected, -0.3% previous), and the Canadian house price index (0.2% expected, 0.0% previous).

As already stated, the most likely market-movers will be the headline and core retail sales since the market expects them to show improvement. If the actual reading comes in as expected or better-than-expected, then that may be enough to reinforce optimism and spur rate hike expectations by September, possibly pushing the Greenback higher in the process. Oh, make sure not to ignore the Canadian house price index since it is expected to show an improvement too.

At 3:00 pm GMT, forex traders will be getting the reading for U.S. business inventories (0.2% expected, 0.1% previous). This is a leading indicator for business activity and the consensus is that inventory stockpiles were not depleted as quickly, indicating little to no increase in business activity, so watch out for any surprises.

Central banker bonus round time! BOC Governor Stephen Poloz will have a press conference in Ottawa about the BOC financial system review, a “detailed review of developments in the financial system and an analysis of policy directions in the financial sector.” As usual, watch out for any updates, change in sentiment, or juicy hints on future monetary policy.

Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis. Head on to Big Pippin’s Daily Chart Art for some pip-locking technical weeks!