London Session Forex Recap – August 13, 2015

  • German CPI m/m: same as previous at 0.2% as expected
  • German HICP m/m: same as previous at 0.3% as expected
  • French CPI m/m: -0.4% as expected v.s. -0.1% previous
  • French HICP m/m: -0.5% as expected v.s. -0.1% previous
  • Swiss PPI m/m: -0.3% actual v.s. -0.2% expected, -0.1% previous

Even though the Chinese yuan slumped for the third straight day, risk appetite came back with a vengeance during today’s morning London forex session, thanks to China’s assurances that there is no need for the yuan to depreciate any further. The risk-on sentiment didn’t seem to spill over into the forex market, though, since most currency pairs decided to just kick back and chillax a bit. Still, there were a few noteworthy currencies.

Up first is the Aussie. The Aussie took a tumble when the London forex session opened, although there weren’t really any catalysts for the decline. It’s possible that European forex traders were pricing-in the 0.69% drop in gold prices to $1,115.90 per troy ounce from earlier. It’s also possible that European forex traders were just pricing-in the third day of Chinese yuan decline. After all, China is a major export destinaton for Australia.

Moving on, risk appetite then began to return to the European markets after the initial drop, and most Aussie pairs decided to call it a day and went to sleep, spending the rest of the forex session in relatively tight ranges.

AUD/USD is down by 26 pips (-0.36%) to 0.7336, AUD/JPY is down by 31 pips (-0.35%) to 91.32, AUD/CHF is down by 27 pips (-0.38%) to 0.7169

The Kiwi is also noteworthy since it followed the Kiwi’s pattern of dropping during the open before hibernating for the rest of the forex session. And like with the Aussie, it’s possible that European forex were just pricing-in the yuan’s depreciation since New Zealand also has China as a major export destination.

There’s also a chance that European forex traders were opening pre-emptive positions ahead of New Zealand’s quarterly retail sales data, which would come out during the very late U.S./very early Asian forex session. And if you haven’t already, make sure to check out Forex Gump’s trading guide on that particular event.

NZD/USD is down by 25 pips (-0.39%) to 0.6574, NZD/CAD is down by 18 pips (-0.2%) to 0.8553, NZD/JPY is down by 33 pips (-0.41%) to 81.81

As for other currencies of note, we have the pound and the euro. Both currencies are noteworthy because they were apparently being kicked around by opposing currency price action, with  GBP/USD up by 4 pips (+0.03%) to 1.5628 and EUR/USD down by 11 pips (-0.10%) to 1.1116, even though there should have been demand for them since the DAX climbed by 1.65% to 11,104.50 and the FTSE 100 was up by 0.65% to 6,614.00. Bond yields were attractive too, with German 10-year bond yields up by 6.12% to 0.642% while U.K. 10-year bond-yields was up by 3.73% to 1.862%.

The forex calendar for the upcoming afternoon London/morning U.S. session has a lot in store for us, so y’all better gear up.

We’ll start with a data dump at 1:30 pm GMT, thanks to the simultaneous release of the U.S. jobless claims (270K expected, 270K previous), Canada’s house price index (0.1% expected, 0.2% previous), the U.S. import price index (-1.2% expected, -0.1% previous), and the headline (0.6% expected, -0.3% previous) and core (0.4% expected, -0.1% previous) readings for U.S. retail sales.

Most forex traders would probably be focusing on the readings for the U.S. retail sales data since they are used to gauge the level of consumer spending, which contributes significantly to the U.S. economy. Also note that both headline and core readings are expected to improve, so we may see some demand for the Greenback should the actual readings meet or beat expectations.

After that, at 3:00 pm GMT, we’ll take it slow with U.S. business inventories (0.3% expected, 0.3% previous). The consensus is that the current reading will be the same as the previous reading, so watch out if the actual reading deviates from the market’s expectation, alright?  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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