London Session Forex Recap – July 8, 2015

  • French BoF Business Sentiment: 98 actual v.s. 99 expected, 99 previous
  • U.K. Halifax HPI m/m: 1.7% actual v.s. 0.3% expected, -0.1% previous
  • FOMC meeting minutes coming up

Despite the rather empty forex calendar, today’s morning London forex session was a very busy one, with practically all currency pairs busting the moves.

Forex traders who have been fleeing to the safe-havens appear to be booking some of their profits as risk appetite began to return to the European markets, with the DAX up by 0.90% to 10,773.30 and German 10-year bond yields up by 6.28% to 0.677%. Forex traders weren’t content with sitting on the sidelines, though, since they immediately used the shifting market sentiment as a reason to load up on the high-yielding commodity currencies.

NZD/USD is up by 61 pips (+0.92%) to 0.6703, NZD/JPY is up by 55 pips (+0.69%) to 81.40

AUD/USD is up by 41 pips (+0.58%) to 0.7425, AUD/JPY is up by 31 pips (+0.34%) to 90.18

Moving on, the pound found no love or mercy from forex traders as a grand selloff commenced despite the reading for Halifax HPI being better-than-expected. Looking at the reports being churned out by the rumor mills, many were devoted on Chancellor of the Exchequer George Osborne’s budget proposal and growth forecasts.

One of the things that we do know about the budget proposal is that he plans to cut the budget by £12 billion per year, but we don’t know exactly where those cuts will be taken from, and that has spawned a lot of theories.

Of course, the pound’s weakness could just be continued pessimism due to yesterday’s rather disappointing reading for manufacturing production.

GBP/USD is down by 47 pips (-0.31%) to 1.5377, GBP/JPY is down by 110 pips (-0.58%) to 186.70, GBP/NZD is down by 282 pips (-1.22%) to 2.2931

As for the euro, it found some buyers at the start of the forex session but quickly got swamped by the sellers for the rest of the session, most likely because of the Greek drama. The euro’s currency correlation to the weak pound may have also been a factor, but I’m sticking with the Greek drama as the primary catalyst since Greece has been pleading for a fair deal from its creditors and the creditors responded by taking a hardline approach. Not a very optimistic development indeed.

EUR/USD is up by 13 pips (+0.11%) to 1.1025, EUR/NZD is down by 137 pips (-0.83%) to 1.6438, EUR/AUD is down by 74 pips (-0.50%) to 1.4840

Last but not the least is the Swissy. Well, it is the least in a sense given that it was the weakest currency during the forex session, even weaker than the troubled pound. There weren’t any direct catalysts that could account for the Swissy’s weakness, but I’m suspecting that the Swiss National Bank (SNB) had something to do with it. After all, SNB Chairman Thomas Jordan has been repeating his mantra that the Swissy is “significantly overvalued” and that the SNB is willing “to take an active role in the foreign exchange market.”

USD/CHF is up by 50 pips (+0.53%) to 0.9495, GBP/CHF is down by 28 pips (-0.19%) to 1.4604, NZD/CHF is up by 90 pips (+1.44%) to 0.6363

The forex calendar for the upcoming afternoon London/morning U.S. session has some heavy-hitters on tap, so be careful.

Up first, at 1:30 pm GMT, is Canada’s building permits (-5.0% expected, 11.6% previous). This particular economic indicator is expected to decline significantly, so Loonie traders should watch closely, especially those who are long.

Then, at 7:00 pm GMT, we’ll get the FOMC meeting minutes, so watch out because this release may cause some volatility. At the same time, forex traders will get a bonus round because Federal Reserve Bank of San Francisco President John Williams will talk about the U.S. economic outlook at an international conference in Los Angeles.

Finally, at 8:00 pm GMT, well get the U.S. consumer credit (18.5B expected, 20.5B previous). It’s not really a market-mover, but it is correlated with consumer spending, so perhaps it may move the markets.

See also:

Asia Session Recap

U.S. Session Recap

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