London Session Forex Recap – June 23, 2015

  • French Flash Manufacturing PMI: 50.5 actual v.s. 49.5 expected, 49.4 previous
  • French Flash Services PMI: 54.1 actual v.s. 52.6 expected, 52.8 previous
  • German Flash Manufacturing PMI: 51.9 actual v.s. 51.2 expected, 51.1 previous
  • German Flash Services PMI: 54.2 actual v.s. 53.0 expected, 53.0 previous
  • Euro Zone Flash Manufacturing PMI: 52.5 actual v.s. 52.2 expected, 52.2 previous
  • Euro Zone Flash Services PMI: 54.4 actual v.s. 53.6 expected, 53.8 previous
  • U.S. durable goods orders coming up

Today’s morning London session was a busy one. And the spotlight was on the euro yet again, thanks to the Greek drama and a slew of European PMI readings.

The euro was under the spotlight (interrogation light would be more accurate) as the European market priced-in yesterday’s events. Specifically, forex traders were probably disappointed when a deal failed to pan out yesterday after Greece submitted a new proposal.

There were also the prevailing fears that the bank run in Greece will finally force officials to impose capital controls. A later report stated that European leaders plan to meet again on Wednesday to finalize a deal, but that didn’t affect the euro’s slide.

Overall, not exactly an optimistic scenario for Greece and the euro. And to add fuel to the fire, a round of intense bond-buying commenced during the session, with German 10-year bond yields down by 2.26% to 0.866%.

A slew of better-than-expected PMI readings came out during the forex session too, but they weren’t enough to stop or even slow the bleeding, but they did give a boost to the equity markets, with the DAX currently up by 1.34% to 11,614.00. On a more interesting note, the euro managed to win out against the Swissy, which is very, very strange.

EUR/USD is down by 57 pips (-0.51%) to 1.1202, EUR/GBP is down by 26 pips (-0.37%) to 0.7098, EUR/CHF is up by 20 pips (+0.19%) to 1.0458

The Swissy was not only weak against the euro; it was weak against every other currency. This is very, very strange because there were no catalysts for the Swissy’s weakness and periods of uncertainty like today usually send forex traders fleeing to the Swissy due to its status as a safe-haven currency.

I’m venturing into speculative territory here, but it’s possible that the Swiss National Bank (SNB) may have had something to do with it. Remember, in its June 18 monetary policy assessment, the SNB explicitly stated that a strong Swissy is a problem and that the SNB is willing and ready to “remain active in the foreign exchange market, as necessary, in order to influence monetary conditions.”

USD/CHF is up by 58 pips (+0.64%) to 0.9326, GBP/CHF is up by 69 pips (+0.47%) to 1.4713, NZD/CHF is up by 25 pips (+0.40%) to 0.6378

The Greenback was on the attack, giving most other currencies a beating but finding stiff resistance from the Loonie and the yen. There were no catalysts to account for the Greenback’s strength during the forex session, so it’s probably just pre-emptive positioning ahead of U.S. data later, although the euro selloff probably gave the Greenback a boost too. I still think that pre-emptive positioning is the reason, though. After all, S&P 500 Futures are currently up by 0.30% to 2,119.15.

USD/JPY is up by 14 pips (+0.11%) to 123.77, USD/CAD is up by 13 pips (+0.11%) to 1.2342, AUD/USD is down by 27 pips (-0.35%) to 0.7708

The forex calendar for the upcoming afternoon London/morning U.S. session is jam-packed with U.S. data, so Greenback traders better watch out.

At 1:30m pm GMT, we’ll have the U.S. headline (-1.0% expected, -1.0% previous) and core (0.5% expected, -0.2% previous) durable goods orders. While the headline reading is expected to remain unchanged, the core reading is expected to improve, so watch out for that since these two are usually market-movers.

Next, at 2:00 pm GMT, we’ll have the U.S. FHFA house price index (0.5% expected, 0.3% previous). This will be followed at 2:45 pm GMT by Markit’s U.S. flash manufacturing PMI (54.1 expected, 54.0 previous). The Fed and most U.S. traders favor the ISM PMI reading, though, so Markit’s PMI reading doesn’t usually affect the Greenback as much.

Finally, at 3:00 pm GMT, forex traders will have the reading U.S. new home sales (524K expected, 517K previous). Remember yesterday’s reading for existing home was better-than-expected and this indicator is expected to improve, so get ready for any surprises.

Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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