London Session Forex Recap – June 24, 2015

  • Swiss UBS Consumption Indicator: 1.73 actual v.s. 1.67 previous
  • French Final GDP q/q: unchanged at 0.6% as expected
  • German IFO Current Conditions: 113.1 actual v.s. 114.1 expected, 114.3 previous
  • German IFO Expectations: 102.0 actual v.s. 102.4 expected, 103.0 previous
  • German IFO Business Climate: 107.4 actual v.s. 108.1 expected, 108.5 previous
  • U.K. BBA Mortgage Approvals: 42.53 actual v.s. 53.35 expected, 42.02 previous
  • U.S. final GDP coming up

The spotlight was on the euro yet again during today’s morning London forex session, thanks to the Greek drama. The euro wasn’t the only currency affected, though. Other currencies felt the weight of the Greek drama too, with the pound and the Greenback being the most noticeable ones.

The Greenback fell back when the forex session opened, as forex traders who have been long on the U.S. dollar began closing their positions ahead of the final reading for Q1 2015 GDP. But all was not lost for the dollar bulls since a news report later went out claiming that Greece’s creditors didn’t accept Prime Minister Alexis Tsipras’ proposals. That piece of news was more than enough to send some forex traders running for the safe-havens, with the Greenback being one of them.

USD/CAD is down by 26 pips (-0.21%) to 1.230 with 1.2275 as the session low, USD/JPY is down by 3 pips (-0.03%) to 123.88 with 123.70 as the session low, USD/CHF is up by 4 pips (+0.06%) to 0.9316 with 0.9279 as the session low

Speaking of Greece, the euro was strong during the German open thanks to the broad U.S. dollar weakness mentioned above. But when news of the deal rejection came out, the euro immediately reversed direction. The euro’s weakness then intensified during the course of the forex session due to a slew of disappointing German IFO readings and a round of bond-buying, which pushed German 10-year bond yields down by 3.46% to 0.837%. The bleeding only stopped (and then some) when an “official” reassured the markets that talks have not broken down followed by a news report that Greece’s creditors presented a counter-proposal.

EUR/USD is up by 17 pips (+0.15%) to 1.1212 with 1.1178 as the session low, EUR/NZD is down by 9 pips (-0.06%) to 1.6298 with 1.6244 as the session low, EUR/AUD is down by 7 pips (-0.05%) to 1.4476 with 1.4498 as the session low

Like the euro, the pound happily took advantage of the broad U.S. dollar weakness at the start of the session. And just like the euro, it too took a tumble when news of the Greek deal rejection came out, which is rather strange since the FTSE 100 is slightly up by 0.30% to 6,855.50 while U.K. 10-year bond yields was up by 0.47% to 2.121, so there was some demand for the pound during the forex session.

The only data point released during the session was U.K. BBA mortgage approvals, which had a less-than-expected increase, but still better than the previous reading. And besides, the aforementioned indicator is a low-tier one. There were some discussions in the media about a 10-20% probability of a Brexit, so perhaps that was it. Well, whatever the case may truly be, the fact remains that the pound was pretty weak during the forex session.

GBP/USD is down by 41 pips (-0.27%) to 1.5756, GBP/AUD is down by 88 pips (-0.43%) to 2.0348, GBP/CAD is down by 85 pips (-0.44%) to 1.9393

The forex calendar for the upcoming afternoon London/morning U.S. session has a slew of U.S. data, but all eyes would probably be on the third and final read for Q1 2015 GDP (-0.2% expected, -0.7% previous) at 1:30 pm GMT.

Forex traders with open positions on the Greenback better watch out, especially the bears, since the consensus is that the final read will be revised to show a lower level of contraction, which is a good thing and will probably give the bulls a good reason to enter. But the bulls should be careful too since there is also a chance that the revision will be less-than-expected. There’s even a possibility that there won’t be any revision at all, so watch out.

Also set for release at 1:30 pm GMT are the U.S. core PCE price index (0.8% expected, 0.8% previous) and the U.S. GDP price index (-0.1% expected, -0.1% previous). Both data points are lower-tier and would probably be overshadowed by the final reading for GDP, though.

Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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