London Session Forex Recap – July 15, 2015

  • French HICP m/m: -0.1% actual v.s. 0.0% expected, 0.2% previous
  • French CPI m/m: -0.1% actual v.s. 0.0% expected, 0.2% previous
  • Swiss ZEW Economic Expectations: -5.4 actual v.s. 0.1 previous
  • U.K. Jobless Rate: 5.6% actual v.s. 5.5% expected, 5.5% previous
  • U.K. Claimant Count Change: 7.0K actual v.s. -9.0K expected, -1.1K previous
  • U.K. Average Earnings Index: 3.2% actual v.s. 3.3% expected, 2.7% previous
  • Canadian overnight rate and rate statement coming up
  • Federal Reserve Chairperson Janet Yellen will testify later

All was calm in the forex front as the the market geared up for the upcoming forex session’s massive data and news blitz. The only noticeable mover was the euro, although it didn’t really move that much.

The euro was grinding higher for most of the forex session despite slightly disappointing inflation data from France. The risk-off market sentiment certainly didn’t help since German 10-year bond yields dropped by 4.86% to 0.802%. It’s possible that forex traders are already pricing-in a Greek parliamentary support for the reforms being demanded by Greece’s creditors. Remember, Greece has to vote on the reforms in order to enter negotiations for a third bailout deal.

Looking at the latest media reports, it seems like Greek Prime minister Alexis Tsipras already has the blessings of the Greek parliament since the proposal presented last week was approved by 251 of the 300-member parliament. The EU Commission also apparently proposed a conditional €7 billion bridge loan to help keep Greece afloat ahead of the actual bailout negotiations, which is another positive news for Greece and the euro, although some forex traders were probably wary of the upcoming data and news blitz since the bullish momentum began to lose steam halfway through the session before eventually giving away some of the euro’s gains near the end of the forex session.

EUR/USD is up by 19 pips (+0.18%) to 1.1019, EUR/JPY is up by 30 pips (+0.22%) to 136.14, EUR/CAD is up by 34 pips (+0.25%) to 1.4058

The pound was interesting too, seeing a lot of volatility when the unemployment data was released, but not really move anywhere.  And while the claimant count change and the jobless rate were disappointing, the average earning index was roughly within expectations, which means that wage growth has accelerated to its fastest pace in five years. This mixed picture is probably why pound pairs were mixed as well, although the knee-jerk reaction among all the pairs was a quick sell-off followed by the pound trying to claw its way back up.

GBP/USD is down by 32 pips (-0.21%) to 1.5631 with 1.5601 as session low, GBP/AUD is up by 10 pips (+0.05%) to 2.0970 with 2.0919 as session low, GBP/JPY is down by 31 pips (-0.16%) to 193.13 with 192.83 as session low

As I said earlier, the forex calendar for the upcoming afternoon London/morning U.S. session has a massive data and news blitz lined up, so I’ll only mention the most important ones.

The vanguard of the data blitz will commence the attack at 1:30 pm GMT, with the release of Canada’s manufacturing sales data (0.3% actual v.s. -2.1% previous), the U.S. Empire State survey (3.25 expected, -1.98 previous), and the headline (0.2% expected, 0.5% previous) as well as core (0.1% expected, 0.1% previous) readings for U.S. PPI. Do note that headline U.S. PPI is expected to decline while Canada’s manufacturing sales data is expected to increase, so watch out if you have an open USD/CAD position.

Next, forex traders will get a small data dump, with the readings for U.S. capacity utilization (78.1% expected, 78.1% previous) and U.S. industrial production (0.2% expected, -0.2% previous) will come out at 2:15 pm GMT. Take notice that U.S. industrial production is expected to finally have a positive reading after three consecutive months of contraction.

After that, volatility may pick up at 3:00 pm GMT due to the consensus among forex analysts that the Bank of Canada (BOC) will have to cut the overnight rate from 0.75% to 0.50% in order to adapt to the oil shocks. Also at the same time, Federal Reserve Chairperson Janet Yellen is scheduled to testify before the House Financial Services Committee in Washington DC.

After those two major events, the BOC will hold a press conference at 4:15 pm GMT, so keep an eye and ear out for what the BOC officials have to say.

Last but definitely not the least, the Greek parliament has to vote on the reforms I mentioned earlier within the day in order to start negotiations for a third bailout deal, so keep a very close watch on that as the outcome would likely cause the euro to make some moves.

Whew! Told ya it’s gonna be a massive data and news blitz. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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