London Session Forex Recap – June 15, 2015

  • Swiss PPI m/m: -0.8% actual v.s. 0.1% expected, -2.1% previous
  • Swiss PPI y/y: -6.0% actual v.s. -5.1% expected, -5.2% previous
  • Swiss Retail Sales: 1.6% actual v.s. -2.2% expected, -2.8% previous
  • Euro Zone Trade Balance: 24.3 actual v.s. 19.0 expected, 19.9 previous

The calm from the Asian session extended to today’s morning London forex session. Not all currencies were in a tranquil state, though, since the Swissy, the euro, and the pound were all mostly down for the forex session.

The euro jumped when the German market opened for business, but slowly gave away most of its gains during the course of the morning London session. There weren’t really any direct catalyst for the jump and subsequent decline, though. The euro zone did have a better-than-expected reading for its trade surplus, but that reading came out late and didn’t really affect the euro since it was showing definite weakness by then. Still, the forex session was interesting enough, thanks to a series of pessimistic news that could have contributed to the euro’s softness during the session.

Up first was German Bundesbank President Jens Weidmann and his statement that “time is running our for Greece.” Weidmann also said something about high debt dampening growth in the euro zone. Interestingly enough, the euro’s upward momentum began to lose steam when Weidmann issued those statements. Moving forward, we did have some news on the Greek drama, with the most notable one being Prime Minister Alexis Tsipras’ reference to the bailouts as “looting” after Greece and its creditors failed to reach a deal on Sunday.

EUR/USD is down by 19 pips (-0.18%) to 1.1207, EUR/AUD is down by 42 pips (-0.30%) to 1.4487, EUR/NZD is down by 24 pips (-0.15%) to 1.6056

Moving on, the Swissy’s weakness was hard to explain, but it was probably due to a disappointing PPI reading since there were no other catalyst to account for the Swissy’s weakness. Currency correlation between the Swissy and the euro could have also dragged down the Swissy, thanks to the close trade relations between the euro zone and Switzerland. Whatever the case may truly be, the fact still stands that the Swissy was rather weak during the forex session.

USD/CHF is up by 46 pips (+0.50%) to 0.9351, NZD/CHF is up by 25 pips (+0.38%) to 0.6518, CHF/JPY is down by 53 pips (-0.40%) to 132.06

As for the pound, the pound felt the heat during the morning London session, grinding ever lower throughout the forex session. There was a lack of economic data during the session, but there were a lot of not-so-happy news for both the pound and the U.K. as a whole.

Aside from the troubles caused by the Conservative Party MPs who formed the pro-Brexit group, the Scottish National Party (SNP) decided to flex its muscles by making demands for more power. All the while, the SNP was threatening to call for another referendum should the SNP’s demands go unheeded. Such political turmoil goes against the promise of stability that a majority government is supposed to bring, and naturally erodes investor confidence.

GBP/USD is down by 46 pips (-0.30%) to 1.5492, GBP/JPY is down by 34 pips (-0.18%) to 191.48, GBP/AUD is down by 62 pips (-0.31%) to 2.0048

The forex calendar for the upcoming afternoon London/morning U.S. session is jam-packed with mid-tier and top-tier items. Hopefully, it would be enough to inject some much needed volatility into the markets.

At 1:30 pm GMT, we’ll get the Canadian manufacturing sales reading (-0.5% expected, 2.9% previous) and the U.S. Empire State survey (6.00 expected, 3.09 previous). Forex traders with positions on USD/CAD should watch out for this one since Canada’s manufacturing sales is expected to decline while the U.S. Empire State survey is expected to show improving conditions.

Next, at 2:15 pm GMT, forex traders will get the readings for U.S. capacity utilisation (78.3% expected, 78.2% previous) and U.S. industrial production (0.2% expected, -0.3% previous). Both mid-tier items are expected to show some improvement, so watch out.

Finally, at 3:00 pm GMT, the U.S. NAHB builders survey (56 expected, 54 previous) will be released. This leading indicator for the housing market is expected to improve slightly. Also, a look at the historical trends shows that this indicator has been above the 50 level, which indicates optimism, so watch out if the actual reading is above or below the 50 level.

Oh, I almost forgot. Forex traders will also get a bonus round at 2:00 pm GMT when ECB President Mario Draghi testifies at the European Parliament‘s Economic and Monetary Affairs Committee. You guys know the drill: keep an war out for any change in sentiment and actual hints on future monetary policy.

Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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