London Session Forex Recap – July 3, 2015

  • Spanish Services PMI: 56.1 actual v.s. 58.0 expected, 58.4 previous
  • Italian Services PMI: 53.4 actual v.s. 52.9 expected, 52.5 previous
  • French Services PMI: unchanged at 54.1 as expected
  • German Services PMI: 53.8 actual v.s. 54.2 expected, 54.2 previous
  • U.K. Services PMI: 58.5 actual v.s. 57.5 expected, 56.5 previous
  • Euro Zone Services PMI: unchanged at 54.4 as expected
  • Euro Zone Retail Trade m/m: 0.2% actual v.s. 0.1% expected, 0.7% previous
  • Euro Zone Retail Trade y/y: 2.4% actual v.s. 2.3% expected, 2.7% previous

Ho-hum. Volatility was in short supply for most currency pairs during today’s morning London forex session, with the Aussie being the only exception since it was weak across the board.

The Aussie has been weak since yesterday, thanks to a rather dismal reading for Australia’s trade balance. During the earlier Asian session, the Aussie’s weakness intensified further due to disappointing retail sales data. And since there were no other data or pessimistic news pertinent to Australia during the morning London forex session, it’s reasonable to conclude that the European market was merely pricing-in the poor retail sales data from earlier.

AUD/USD is down by 63 pips (-0.84%) to 0.7518, AUD/JPY is down by 87 pips (-0.92%) to 92.46, AUD/CHF is down by 61 pips (-0.89%) to 0.7079

As for other currencies of note, up first is the pound. The pound found some buyers shortly after U.K. services PMI posted a better-than-expected reading. After that, most pound pairs began losing steam (with some pairs losing ground) even though there weren’t really any direct catalysts. It’s possible that the bond-buying that commenced during the forex session was enough to put the squeeze on the pound since the U.K. 10-year bond yields are down by 1.54% to 2.047%. It’s also possible that forex traders who were long on the pound were closing their positions to avoid weekend risk.

GBP/USD is up by 19 pips (+0.12%) to 1.5625, GBP/NZD is up by 86 pips (+0.37%) to 2.3357, GBP/AUD is up by 202 pips (+0.98%) to 2.0786

Moving on, another currency worth noting is the euro. The euro started the session strong, thanks to a slew of better-than-expected PMI readings. Afterwards, most euro pairs followed the pound’s example by stalling or giving away some of their gains. Like the pound, there weren’t any major catalysts that could account for the weakness. It’s possible that forex traders who were betting that the price gaps at the start of the week would be closed were finally closing their positions. Just as likely is the squeeze that the bond-buying could have had on the euro, with German 10-year bond yields down by 2.36% to 0.826%.

As for updates on the Greek drama, there weren’t really any major ones. The latest polls for the Greek referendum show that the “yes” camp is slightly in the lead with 44.8% versus the “no” camp who have 43.4%. Also, the European Central Bank (ECB) is still baiting the Greeks with the much-needed bank funds, with ECB Vice President Vitor Constancio saying that the funds would be loosened if the majority of Greeks would vote “yes” during the referendum.

EUR/USD is up by 4 pips (+0.04%) to 1.1097, EUR/GBP is up by 23 pips (+0.17%) to 1.3951, EUR/CAD is up by 139 pips (+0.95%) to 1.4767

The forex calendar for the upcoming afternoon London/morning U.S. session is pretty bare. Also, the U.S. is celebrating its Independence Day this Friday since the 4th of July falls on a Saturday. And did I mention that today’s a Friday? All I’m saying is that liquidity would probably be thin in the upcoming session. But do watch out if a major update on the Greek drama comes out. And thin liquidity sometimes enables dramatic price action, so watch out for that too.

Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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