London Session Forex Recap – July 23, 2015

  • U.K. Retail Sales m/m: -0.2% actual v.s. 0.4% expected, 0.2% previous
  • U.K. Core Retail Sales m/m: -0.2% actual v.s. 0.4% expected, 0.2% previous
  • Spanish Jobless Rate: 22.4% actual v.s. 22.8% expected, 23.8% previous
  • Canadian retail sales data coming up

There were only a couple of items on the docket, but today’s morning London session saw a lot of volatility as European traders priced-in the most recent developments.

Up first is the pound. The pound got a severe pounding from its forex rivals almost immediately after both the headline and core retail sales reading printed very disappointing results, which meant lower demand for stuff and goes against the Bank of England’s expectations that consumption will pick up. In addition, slumping demand also helps to thwart expectations for higher inflation levels and a future rate hike.

GBP/USD is down by 31 pips (-0.20%) to 1.5592, GBP/JPY is down by 77 pips (-0.40%) to 193.01, GBP/CHF is down by 92 pips (-0.61%) to 1.4890

The pound selloff gave the euro a nice boost, but the euro was also probably getting a lift from the better-than-expected reading for Spain’s jobless rate. It’s also probably safe to assume that European traders were pricing-in the earlier good news pertaining to the the second Greek bailout vote since most euro pairs jumped at the start of the forex session (and before the retail sales data were released).

Speaking of Greece, there weren’t any other major developments after the second Greek vote. There were talks about Greece opening its stock exchange by next week, which is an optimistic development. There was also the usual fear-mongering, but other than those, everything was pretty much chill.

EUR/USD is up by 67 pips (+0.62%) to 1.0996, EUR/CHF is up by 21 pips (+0.21%) to 1.0500, EUR/GBP is up by 56 pips (+0.80%) to 0.7050

Looking at the other currencies, it seems like forex traders were loading up on the comdolls at the expense of the safe-haven currencies. Heck, even the strong euro was only barely winning out on the comdolls, with EUR/CAD up by 21 pips (+0.14%) to 1.4267, EUR/NZD up by 3 pips (+0.02%) to 1.6473, and EUR/AUD up by 7 pips (+0.05%) to 1.4845.

Perhaps risk appetite has returned to the forex market due to the second Greek bailout vote, but strangely enough, the other European markets didn’t really show any signs of risk-on sentiment. The DAX, for example, was down by 0.33% to 11,482.30, and a round of bond-buying pushed German 10-year bond yields down by 0.94% to 0.739%. Gold was also up by 0.82% to $1,100.40 per troy ounce for the forex session.

Hmmm. I guess the Aussie could have gotten a boost from higher gold prices since Australia is a major gold digger… er, I meant gold producer. Australia also saw an improvement to its quarterly NAB business confidence earlier, and European forex traders may be pricing that in. Loonie strength, meanwhile, could just be pre-emptive positioning ahead of positive expectations for retail sales data later. As for the Kiwi, maybe European traders also viewed the RBNZ’s statement as less dovish and less downbeat, and they were pricing that in.

The forex calendar for the upcoming afternoon London/morning U.S. session may bring about more volatility, especially for the Loonie.

At 1:30 pm GMT, we’ll get a small data dump with the release of Canada’s headline (0.6% expected, -0.1% previous) and core (0.8% expected, -0.6% previous) retail sales reading. As I already mentioned, both consumer spending indicators are expected to improve. And if you are planning to trade this event, make sure to check out Forex Gump’s trading guide.

Also up for release at 1:30 pm GMT is the reading for the U.S. initial claims (278K expected, 281K previous). The number of jobless individuals filing for unemployment insurance is expected to decline, so keep an eye on the Greenback.

Up next, at 3:00 pm GMT, forex traders will get a couple of low-tier items: the euro zone flash consumer sentiment (-5.8 expected, -5.6 previous) and the U.S. CB leading indicator (0.3% expected, 0.7% previous).

Finally, at 3:15 pm GMT, we’ll get a bonus round with German Bundesbank President Jens Weidmann’s speech in Frankfurt. You know the drill: keep an ear and eye out for any shifts in sentiment and economic outlook. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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