London Session Forex Recap – July 27, 2015

  • German Import Price Index m/m: -0.5% actual v.s. 0.0% expected, -0.2% previous
  • M3 Money Supply y/y: 5.0% actual v.s. 5.1% expected, 5.0% previous
  • German Ifo Current Conditions: 113.9 actual v.s. 112.9 expected, 113.1 previous
  • German Ifo Expectations: 102.4 actual v.s. 101.8 expected, 102.0 previous
  • German Ifo Business Climate: 108.0 actual v.s. 107.2 expected, 107.4 previous
  • U.K. CBI Industrial Trends: -10 actual v.s. -6 expected, 07 previous
  • Headline and core readings for U.S. durable goods orders coming up

Today’s a Monday, so most currency pairs were just contently milling about in tight ranges during the morning London forex session. The German Ifo business survey was on tap, though, so euro pairs were on the move.

The euro started moving higher about an hour before the German Ifo survey results were released. There weren’t any other catalysts to account for the surge in strength, and given how most euro pairs quickly lost steam (and some even began grinding lower) after the survey results were released, it’s probably safe to say that the initial surge was just preemptive positioning.

It’s strange, though, since the survey was expected to show a slight deterioration in most of the major components, although we now know that all of them exceeded the market’s expectations. Maybe some forex trader got a sneak-peek at the survey results?

Oh, for the newbie forex traders out there who are just tuning in, the Ifo survey has about 7,000 businesses as participants, which is why many forex traders and market analysts pay attention whenever it is released.

EUR/USD is up by 41 pips (+0.37%) to 1.1068 with 1.1112 as session high, EUR/JPY is up by 42 pips (+0.31%) to 136.46 with 136.98 as session high, EUR/GBP is up by 32 pips (+0.45%) to 0.7134 with 0.7159 as session high

As for major updates on the Greek drama, there were none. There was a report that Greece’s creditors were already arriving in Athens to start talks on a third bailout deal later this week after delays last week. One interesting point made by Greece’s spokeswoman, Olga Gerovasili, is that there was “no reason” for the delay, so the markets shouldn’t worry about another potential conflict between Greece and its creditors.

Looking at the other currencies, the pound is steady but mostly grinding lower, with GBP/USD down by 13 pips (-0.08%) to 1.5511. The only possible catalyst for the weakness was the disappointing reading for CBI industrial trends, which means a greater contraction in volume. It’s a low-tier report, though.

Perhaps market sentiment was in play too since the FTSE 100 was down by 0.56% to 6,542.80 while bond-buying caused U.K. 10-year bond yields to shrink by 1.14% to 1.916%, which probably dampened demand for the pound.

Speaking of market sentiment, the risk-off sentiment didn’t boost demand for the Greenback, but it was probably the reason why some Swissy pairs got injected with a little volatility. First dropping into the London open, Swiss franc pairs have bounced since, failing to establish a clear direction.

USD/CHF is down by 10 pips (-0.11%) to 0.9571 with 0.9529 as session low, GBP/CHF is down by 21 pips (-0.15%) to 1.4855 with 1.4785 as session low, AUD/CHF is up by 5 pips (+0.07%) to 0.6979 with 0.6942 as session low

The forex calendar for the upcoming afternoon London/morning U.S. session only has the headline (3.2% expected -2.2% previous) and core (0.5% expected, 0.0% previous) readings for U.S. durable goods orders scheduled for release at 1:30 pm GMT.

Core durable goods orders acts as a leading indicator for production, and both headline and core readings are expected to show significant increases in purchase orders, so watch out for that, especially if you are shorting the Greenback since actual readings which meet or beat expectations may cause the Greenback to strengthen. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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