London Session Forex Recap – July 6, 2015

  • German Factory Orders m/m: -0.2% actual v.s. -0.4% expected, 2.2% previous
  • German Factory Orders y/y: 4.7% actual v.s. 3.8% expected, 1.3% previous
  • Swiss CPI m/m: 01.% actual v.s. 0.2% previous
  • Swiss HICP m/m: 0.2% actual v.s. 0.0% previous
  • Euro Zone Retail PMI: 50.4 actual v.s. 51.4 previous
  • Euro Zone Sentix Indicator: 18.5 actual v.s. 15.0 expected v.s. 17.1 previous
  • Canadian Ivey PMI and U.S. ISM non-manufacturing PMI coming up

After most price gaps were filled near the end of the Asian session, it seems like forex traders decided to take a break since the morning London forex session was a bit of a snoozefest. Most currency pairs were in hibernation mode, with the exception of the euro and the Loonie.

The euro jumped at the start of the forex session, perhaps due to Germany’s factory orders data, which saw a very significant improvement for its year-on-year reading. Although the fact that Greek Finance Minister Yanis Varoufakis has voluntarily resigned probably helped too since it would allow talks to proceed more smoothly given that many European leaders don’t like him too much. Well, that’s what Varoufakis claims in any case.

After that, the euro began sliding down without any catalyst to push it along, so it was probably just profit-taking after the gaps were filled. It could also have been downward pressure from the bond-buying session that occurred, evidenced by German 10-year bond yields down by 8.06% to 0.730% for the session.

EUR/USD is down by 37 pips (-0.34%) to 1.1017 with 1.1057 as session high, EUR/JPY is down by 33 pips (-0.25%) to 135.22 with 136.04 as session high, EUR/NZD is down by 43 pips (-0.26%) to 1.6470 with 1.6570 as session high

As for the Loonie, it was weak overall. There weren’t really any news or data that could have caused the Loonie’s weakness, so it was probably just pre-emptive positioning ahead of potentially disappointing Ivey PMI data later. Also, Brent crude oil was down by 3.31% to 58.33 during the forex session. Perhaps that was enough to cause demand for the Loonie to weaken. After all, Canada is a major producer of oil.

USD/CAD is up by 47 pips (+0.38%) to 1.2635, NZD/CAD is up by 29 pips (+0.33%) to 0.8451, GBP/CAD is up by 73 pips (+0.38%) to 1.9652

Aside from Canada’s Ivey PMI, the forex calendar for the upcoming afternoon London/morning U.S. session also has other heavy-hitters lined up, so we may potentially see a pickup in volatility.

At 2:45 pm GMT, we’ll start with Markit’s final U.S. services PMI (54.8 expected, 54.8 previous) as an appetizer. Most traders tend to focus on the ISM’s reading, so this indicator very rarely moves the market.

Moving on, at 3:00 pm GMT, forex traders will get the U.S. ISM non-manufacturing PMI (56.4 expected, 55.7 previous) and Canadian Ivey PMI (56.0 expected, 62.3 previous) for the main course. we’ll also get the U.S. labor market conditions index (1.3 previous) as a side dish.

Again, the most likely market-movers are the PMI readings. Also note that the reading for U.S. PMI is expected to improve while the reading for Canada’s PMI is expected to deteriorate, so keep an eye on USD/CAD if the actual readings are within expectations.

Finally, at 3:30 pm GMT, we’ll get the Bank of Canada’s (BOC) business outlook survey. It is a survey of around 100 businesses with regard to their economic outlook, and it serves as a leading indicator for the business conditions in the private sector. Do take into account that this is released by the BOC, so it may potentiallu move the markets.

Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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