London Session Forex Recap – July 16, 2015

  • Swiss Retail Sales: -1.8% actual v.s. 0.0% expected, 0.2% previous
  • Euro Zone Trade Balance: 21.2B actual v.s. 22.0B expected, 23.9B previous
  • Euro Zone Final Headline HICP y/y: no revision at 0.2% as expected
  • Euro Zone Final Core HICP y/y: no revision at 0.8% as expected
  • ECB maintains refinancing rate at 0.05%
  • ECB maintains deposit rate at -0.2%
  • ECB press conference coming up
  • Day 2 of Fed Chairperson Yellen’s testimony later

Today was another quiet morning London forex session, with most currency pairs happily milling about in tight ranges. The only breakers of the peace were the euro and the Aussie.

Risk appetite returned to the European markets with the DAX up by 1.62% to 11,726.80 and German 10-year bond yields also up by 2.72% to 0.793%. That didn’t help pump up demand for the euro, though, since the euro kept sliding ever lower throughout the forex session. Perhaps forex traders were disappointed with the euro zone’s lower-than-expected trade surplus. And it seems like Greek parliamentary support for a bailout deal didn’t convince euro bulls to load up either.

Looking at the other news reports on the Greek drama, there wasn’t really anything market-moving. German Finance Minister Wolfgang Schaeuble kept grumbling that Greece should exit the euro zone, but that’s old news. There were also reports about the underlying weakness among other euro zone countries such as Spain and Italy, so perhaps long-term traders were pricing-in those reports.

EUR/USD is down by 45 pips (-0.41%) to 1.0885, EUR/AUD is down by 91 pips (-0.62%) to 1.4717, EUR/NZD is down by 54 pips (-0.33%) to 1.6689

While market sentiment did not have an apparent effect on the euro, the Aussie got some much-needed love from forex traders. It’s also probable that the European market is pricing-in the earlier optimistic reading for the Melbourne Institute’s inflation expectations.

AUD/USD is up by 16 pips (+0.22%) to 0.7396, AUD/CHF is up by 36 pips (+0.51%) to 0.7076, AUD/JPY is up by 35 pips (+0.39%) to 91.74

Broad market sentiment was also probably the reason why the Kiwi’s earlier sell-off lost steam during the London forex session since there weren’t really any other catalysts that could explain why Kiwi bears suddenly lost interest.

NZD/USD is down by 5 pips (-0.08%) to 0.6520, NZD/CAD is up by 8 pips (+0.10%) to 0.8441, NZD/JPY is up by 9 pips (+0.12%) to 80.92

The forex calendar for the upcoming afternoon London/morning U.S. session is filled to the brim with a mix of heavy-hitting and lightweight items, so I’ll just point out the most important ones.

We’ll start at 1:30 pm GMT, with the reading for U.S. jobless claims (285K expected, 297K previous), Canada’s foreign securities purchases (8.21B expected, 12.94B previous), and the ECB press conference. Most forex traders will probably be keeping a close eye on the ECB press conference because ECB President Mario Draghi is expected to be asked about his views about Greece as well as the overall economic outlook for the euro zone, so be careful if you have an open positions or orders in the euro.

Next, at 3:00 pm GMT, forex traders will get the U.S. NAHB builders survey (59 expected, 59 previous) and the Philadelphia Fed survey (12.0 expected 15.2 previous).

At 7:00 pm GMT, we got another central banker speaker in the person of Bank of England Governor Mark Carney. He is scheduled to speak at the Lincoln Cathedral in England and there’s no word on the topic yet, but the Guv’nah himself is speaking so make sure to keep an ear out for anything related to the economy or monetary policy.

Finally, at 7:30 pm GMT, Federal Reserve Chair Janet Yellen will be back in the spotlight for her second testimony on the on the Monetary Policy Report before the Senate Banking Committee.  It’s likely we won’t get new insights from yesterday’s testimony, but stay alert because any surprises from her will most likely be market moving in a big way. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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