London Session Forex Recap – August 7, 2015

  • Swiss Jobless Rate: unchanged at 3.3% as expected
  • Swiss Foreign Currency Reserves: CHF 531.8B actual v.s. CHF 516.0B previous
  • German Industrial Production m/m: -1.4% actual v.s 0.3% expected, 0.0% previous
  • German industrial Production y/y: 0.6% actual v.s. 2.2% expected, 2.1% previous
  • German Trade Balance: €24.0B actual v.s. €21.0B expected, €19.5B previous
  • French Trade Balance: -€2.66B actual v.s. €3.63B expected, €4.02B previous
  • French Industrial Production m/m: -0.1 actual v.s. 0.2% expected, 0.4% previous
  • French Manufacturing Production m/m: -0.7% actual v.s. 0.2% expected, 0.6% previous
  • U.K. Trade Balance: -£9.18B actual v.s. -£9.30B expected, -£8.42B previous
  • Canadian and U.S. jobs data coming up

Lots of data, but little movement to show for it. Today’s morning London session was relatively subdued, probably because it’s another NFP Friday, but there were a few noteworthy currency moves to check out.

Up first is the Aussie, which was slowly creeping higher for much of the forex session. The most plausible reason for the Aussie’s strength is that European forex traders were pricing-in the RBA’s relatively upbeat Statement on Monetary Policy from earlier since there weren’t really any other catalysts during the forex session.

AUD/USD is up by 11 pips (+0.15%) to 0.7385, AUD/CHF is up by 20 pips (+0.28%) to 0.7258, AUD/JPY is up by 12 pips (+0.12%) to 92.11

The Swiss franc was noticeable too since it was broadly weak. Perhaps the SNB was sneakily manipulating the market again, in line with its mandate to “take an active role in the foreign exchange market” in order to weaken the “overvalued Swiss franc.” It’s also possible that forex traders were pre-empting the SNB due to Switzerland’s foreign currency reserves ballooning to its current levels, which means that the SNB has probably been trying to weaken the Swissy and will likely keep doing so.

USD/CHF is up by 12 pips (+0.13%) to 0.9829, CAD/CHF is up by 16 pips (+0.22%) to 0.7497, NZD/CHF is up by 11 pips (+0.19%) to 0.6453

Last on the list is the euro, which jumped higher near the start of the London session and shortly after the data for Switzerland’s foreign currency reserves were released. If the SNB was trying to weaken the Swissy again, or if forex traders were anticipating that the SNB will do so, then the first currency they would try to buy up against the Swissy would be the euro since most of Switzerland’s exports go to the euro zone member countries.

Interestingly enough, the euro’s rally versus its forex rivals was later capped as disappointing trade and production data from France likely began to weigh-in on the shared currency. The euro kept making relatively sustained gains against the Swissy, though, which further reinforces my theory of SNB manipulation.

EUR/USD is up by 18 pips (+0.17%) to 1.0933 with 1.0948 as session high, EUR/JPY is up by 10 pips (+0.08%) to 136.30 with 136.56 as session high, EUR/CHF is up by 27 pips (+0.25%) to 1.0741 with 1.0755 as session high

As for the pound, the U.K. saw its trade deficit widen in June, but forex traders were not too eager to go short on the pound since most pound pairs were imprisoned in relatively tight ranges for most of the forex session, with GBP/USD up by 14 pips (+0.09%) to 1.5514.

The forex calendar for the upcoming afternoon London/morning U.S. is filled to the brim with heavy-hitting data, so get your game face on and let me hear your war-cry!

We’ll start with a data dump at 1:30 pm GMT since Canada’s jobless rate (6.8% expected, 6.8% previous) and net change in employment (5.0K expected, -6.4K previous) will be released together with the U.S. jobless rate (5.3% expected, 5.3% previous), non-farm payrolls (225K expected, 223K previous), and U.S. average hourly earnings (0.2% expected, 0.05 previous).

The reading for Canada’s building permits (5.0% expected, -14.5% previous) will also be released at the same time, but most forex traders would probably be focusing on the jobs data, especially non-farm payrolls and the U.S. jobless rate since a potential rate hike from the Fed rests on the upcoming employment data.

Also note that ADP non-farm payrolls posted a disappointing reading (185K actual v.s. 216K expected, 229K previous), so there may be a lot of U.S. dollar bears in the sidelines. And if you plan to trade this event, make sure to read up on Forex Gump’s trading guide.

Moving on, we’ll get Canada’s Ivey PMI (51.5 expected, 55.9 previous) at 3:00 pm GMT. Do note that the reading is expected to deteriorate, so keep a close eye on the Loonie.

Finally, at 8:00 pm GMT, we’ll get the reading for U.S. consumer credit ($17.00B expected, $16.09 previous). It’s expected to increase, so consumer spending is also expected to increase, which is potentially good news for the Greenback. Watch out if the actual readings fail to meet market expectations, though. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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