London Session Forex Recap – August 18, 2015

  • U.K. Headline CPI y/y: 0.1% actual v.s. 0.0% expected, 0.0% previous
  • U.K. Core CPI y/y: -0.2% actual v.s. -0.3% expected, 0.0% previous
  • U.K. House Prices y/y: 5.7% actual v.s. 5.9% expected, 5.6% previous
  • U.K. PPI Input m/m: -0.9% actual v.s. -1.9% expected, -1.8% previous
  • U.K. PPI Output m/m: -0.1% as expected, same as last time
  • U.S. housing data coming up

The spotlight was on the U.K. inflation reports during today’s morning London forex session, and pound pairs were naturally the main movers, although other currencies were on the move too.

Let’s talk about the pound first. Most pound pairs showed weakness during the German open but saw enough buyers to stay supported when the London forex session opened. Not long after, the pound began to skyrocket as firmer inflation data caused forex traders to begin loading up on the pound.

According to the Office for National Statistics (ONS), the uptick in headline inflation was apparently due to a “smaller fall in clothing prices on the month compared with a year ago.”

GBP/USD is up by 136 pips (+0.87%) to 1.5701, GBP/JPY is up by 153 pips (+0.79%) to 195.14, GBP/AUD is up by 193 pips (+0.91%) to 2.1375

The euro was on the move too, but it was moving to the downside. There weren’t any major updates on the Greek situation, nor were there any economic data released during the session that could account for the euro’s weakness, so perhaps capital flow was in play again. This time, capital was flowing to the pound at the expense of the euro, thanks to the better-than-expected U.K. inflation data. EUR/GBP’s price action seems to confirm this theory, although it’s also possible that there was little demand for the euro because the DAX was down by 0.25% to 10,912.80 during the forex session.

EUR/USD is down by 12 pips (-0.12%) to 1.1059, EUR/JPY is down by 24 pips (-0.17%) to 137.46, EUR/GBP is down by 67 pips (-0.95%) to 0.7043

As for the other currencies, the comdolls were mixed with little to no directional movement. And the same can be said for the yen and Swissy. The Greenback, meanwhile, was broadly weak. There weren’t any catalysts during the forex session, so it’s probably just pre-emptive positioning ahead of U.S. housing data for later, although it’s also possible that the poor performance of the U.S. futures market dampened demand for the Greenback, with the S&P 500 futures down by 0.23% to 2,094.45 and Nasdaq Futures down by 0.30% to 4,551.20.

USD/CHF is down by 9 pips (-0.10%) to 0.9761, USD/JPY is down by 12 pips (-0.10%) to 124.26, USD/CAD is down by 15 pips (-0.12%) to 1.3101

The forex calendar for the upcoming afternoon London/morning U.S. session is rather lonely since we only have the readings for U.S. building permits (1.23M expected, 1.34M previous) and U.S. housing starts (1.18M expected, 1.17M previous) to look forward to at around 1:30 pm GMT.

Do note that these indicators for the housing sector tend to be heavy-hitters, though, so watch it. Also note that the two indicators are at odds with each other since the the number of new building permits issued is expected to decrease while the number of houses that started construction is expected to increase.

Moving along, a dairy auction is currently underway, so keep an eye on that since it may potentially cause the Kiwi to struggle a bit. Moreover, we also have the readings for New Zealand’s PPI output (-0.2% expected, -0.9% previous) and PPI input (-0.5% expected, -1.1% previous) scheduled for release way late into the U.S. session at around 11:45 pm GMT. As a reminder both indicators are expected to show improvements, so keep an eye on the Kiwi since it may find some buyers if the actual readings meet or beat expectations. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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