London Session Forex Recap – July 17, 2015

  • No economic reports were released during the London session
  • U.S. and Canadian inflation data on tap
  • U.S. housing data coming up

With a forex calendar devoid of economic reports, most currency pairs saw limited volatility during today’s morning London session. Some pairs, though, turned to previous events and market sentiment for direction.

The pound was pretty strong for most of the week, but forex traders were dumping it hard during the London session. The forex calendar was empty so its likely that pound bulls were just closing out their positions to avoid weekend risk (or to enjoy some yummy profits). It also helps that risk aversion began to pervade the market, with the FTSE 100 down by 0.13% to 6,787.50.

It’s also possible that European traders were pricing-in Bank of England (BOE) Governor Mark Carney’s remark yesterday that “developments in the exchange rate have been important for UK inflation and activity, and in particular we have experienced persistent exchange rate pass-through to headline inflation. This risk is particularly relevant at present when the monetary policy stance of our largest trading partner is diverging with ours.” Carney is trying to sound profound by using economic-speak, but he’s basically just saying that the pound is too strong.

GBP/USD is down by 60 pips (-0.38%) to 1.5602, GBP/JPY is down by 73 pips (-0.38%) to 193.52, GBP/AUD is down by 57 pips (-0.28%) to 2.1081

Most Aussie pairs were also weak, extending their losses from the Asian session. Most Aussie pairs were in the green for the week, so perhaps Aussie bulls were cashing-in on their positions to avoid weekend risk. Of course, the prevailing slightly risk-off sentiment could be playing against the high-yielding Aussie too.

AUD/USD is down by 14 pips (-0.20%) to 0.7392, AUD/NZD is down by 37 pips (-0.33%) to 1.1295, AUD/JPY is down by 16 pips (-0.18%) to 91.70

The Kiwi is the yin to the Aussie’s yang since it was weak for most of the week, but it was grinding its way higher during today’s forex session. As a high-yielder, the Kiwi is fighting against the broad market sentiment, so it’s probably safe to say that forex traders who have been shorting the Kiwi are just securing their hard-won profits in order to avoid weekend risk.

NZD/USD is up by 17 pips (+0.26%) to 0.6552, NZD/CAD is up by 40 pips (+0.47%) to 0.8503, NZD/CHF is up by 22 pips (+0.37%) to 0.6273

As for updates on the euro and the Greek drama, the euro only saw limited volatility and ended the session mixed, with EUR/USD up by a mere 8 pips (+0.08%) to 1.0892.

There weren’t really any market-moving news on Greece either. German Chancellor Angela Merkel was telling the German parliament to back a Greek bailout deal, but that’s not really market-moving.  The European Union’s finance ministers also finally approved the €7 billion bridge loan to Greece, but practically everybody was expecting that, so nothing new there.

As for the Greenback, it was mixed for the session but well-behaved. Forex traders were probably sitting on their hands (or biting on their nails) ahead of some top-tier items for later.

The forex calendar for the upcoming afternoon London/morning U.S. session may just infuse the markets with some much-needed volatility.

We’ll start at 1:30 pm GMT with a data barrage since the readings for U.S. housing starts (1.10M expected, 1.04M previous), U.S. building permits (1.15M expected, 1.25M previous), and U.S. headline (0.3% expected, 0.4% previous) and core (0.2% expected, 0.1% previous) CPI are coming out. In addition, Canadian headline (0.2% expected, 0.6% previous) and core (-0.1% expected, 0.4% previous) CPI are also coming out.

Do note that both U.S. and Canadian CPI are expected to deteriorate, but the consensus is that Canadian core CPI is gonna dip into the red. Also remember that Canada just cut rates recently, so forex traders have little love for the Loonie.

Moving on, at 3:00 pm GMT, we’ll get the preliminary readings for the University of Michigan’s consumer sentiment index (96.0 expected, 96.1 previous), consumer expectations index (87.0 expected, 87.8 previous), and current conditions index (97.2 expected 108.9 previous). They’re all expected to slide a bit, so keep an eye on the Greenback. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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