London Session Forex Recap – June 29, 2015

  • Spanish Flash CPI m/m: 0.3% actual v.s. 0.1% expected, 0.5% previous
  • Spanish Flash HICP m/m: 0.2% actual v.s. 0.0% expected, 0.4% previous
  • German Flash CPI m/m: -0.1% actual v.s. 0.2% expected, 0.1% previous
  • German Flash HICP m/m: -0.2% actual v.s. 0.2% expected, 0.1% previous
  • U.K. Net Lending to Individuals: 3.1B actual v.s.s 3.3B expected, 2.9B previous
  • U.K. M4 money Supply m/m: 0.5% actual v.s. 0.5% expected, 0.4% previous
  • U.K. Mortgage Approvals: 69.4K actual v.s. 68.9K expected, 67.6K previous

The morning London forex session was surprisingly subdued despite a whole slew of data. The only noticeable movers were the Swissy, the Loonie, and the euro.

After the imposition of capital controls on Greek banks and fears of a Greek default caused practically all euro pairs to open with dramatic gaps, little to no seller follow-through was seen during the London forex session. In fact, most euro pairs were inching their way higher due perhaps to profit-taking by the bears. It’s also possible that euro bulls were loading up, believing that a deal is still possible, since French President Francois Hollande is still optimistic on a deal, stating that “a deal is still possible” and “France … is always available for the dialogue to resume.”

The Greek drama also caused a capital flight from the European bond markets, with German 10-year bond yields down by a whopping 13.70% to 0.794%, but that didn’t seem to faze the euro bulls in any way. The borrowing costs of other euro zone countries plagued by debt, such as Spain and Italy, also jumped due to fears of a contagion effect, but that too didn’t affect the euro’s climb.

EUR/USD is up by 36 pips (+0.32%) to 1.1125, EUR/JPY is up by 42 pips (+0.31%) to 136.69, EUR/NZD is up by 46 pips (+0.29%) to 1.6249

Moving on, the Loonie was pretty weak during the forex session. There weren’t really any direct catalyst that could have caused the weakness, but oil prices were down during the forex session, with Brent crude oil down by 2.79% to 61.50.

To newbies out there who are wondering what oil has to do with the Loonie, let me just say that the Loonie has a positive correlation to oil prices because Canada is a major producer of oil.

USD/CAD is up by 40 pips (+0.33%) to 1.2354, EUR/CAD is up by 66 pips (+0.49%) to 1.3724, GBP/CAD is up by 62 pips (+0.32%) to 1.9396

As for the Swissy, it was rather strong during the session. Forex traders were probably dumping the euro in favor of the safe-haven Swissy since there weren’t really any direct catalyst for the Swissy’s strength. I’m pretty sure SNB Chairman Thomas Jordan is not too happy with this particular development since he has been referring to the Swissy as “significantly overvalued.”

USD/CHF is down by 23 pips (-0.24%) to 0.9332, EUR/CHF is down by 8 pips (-0.08%) to 1.0368, CAD/CHF is down by 42 pips (-0.55%) to 0.7550

The forex calendar for the upcoming afternoon London/morning U.S. session is relatively sparse with only one potential market-mover lined up, so volatility may potentially be subdued as well.

At 1:30 pm GMT, forex traders will get a Loonie special with the release of the Canadian raw materials price index (4.5% expected, 3.8% previous) and industrial product price index (0.3% expected, -0.9% previous). Between the two consumer spending indicators, the raw materials price index tends to move the markets more since the industrial product price index only includes goods produced domestically. Both are expected to show improvements, though, so it’s all moot unless the actual readings conflict.

Then, at 3:00 pm GMT, we’ll then get the reading for U.S. pending home sales (1.4% expected, 3.4% previous). This indicator acts as a gauge for the housing market and may move the markets, so forex traders should watch out. Do note that it is expected to decline, so be ready if the actual reading is way off expectations.

Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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