- Euro Zone Current Account: €25.4B actual v.s. €19.2B expected, €19.1B previous
- Euro Zone Construction Output: -1.9% actual v.s. 0.2% previous
- German parliament votes in favor of Greek bailout deal
- U.S. headline and core CPI readings on tap
- FOMC meeting minutes to be released later
With no major data on the docket, today’s morning London forex session was driven primarily by market sentiment and the forex market’s inter-market relationships, especially with the equity markets and commodities.
Risk aversion took hold of the market during the forex session, with the DAX plunging by 1.15% to 10,790.50 during the course of the session. As a result, demand for the euro was stifled despite news that the German parliament voted overwhelmingly in favor of a Greek bailout deal. But given how the euro was slowly edging higher during the Asian session, it’s highly probable that forex traders were already betting on a favorable outcome from the German parliament, which makes this a perfect example of the old saying “buy the rumor, sell the news.”
EUR/USD is down by 26 pips (-0.24%) to 1.1038, EUR/JPY is down by 26 pips (-0.19%) to 137.22, EUR/CHF is down by 45 pips (-0.42%) to 1.0746
As usual, the risk-off sentiment sent forex traders fleeing to gold, which was up by 0.33% to $1,120.60 per troy ounce during the forex session. Forex traders also fled to the Swiss franc, which was incidentally the top dog of today’s morning London forex session.
USD/CHF is down by 18 pips (-0.19%) to to 0.9734, AUD/CHF is down by 21 pips (-0.29%) to 0.7151, GBP/CHF is down by 37 pips (-0.24%) to 1.5252
The Greenback also got a boost from the risk-off sentiment, with USD/JPY up by 10 pips (+0.09%) to 124.35, even though the S&P 500 futures was down by 0.26% to 2,088.65 and the Nasdaq Futures was down by 0.21% to 4,534.30. Overall, the Greenback was the second strongest currency during the forex session, losing out only to the mighty Swissy.
As for the session’s casualties, we have the comdolls – all of them. The Kiwi saw no love from European forex trader who, like the Asian forex traders from earlier, just shrugged off the 14.8% increase in the GDT index. The Aussie was spurned too despite higher gold prices. As for the Loonie, European forex traders probably dumped it because oil prices are sitting just above six-year lows and oversupply continues to threaten even more declines in oil prices.
NZD/USD is down by 11 pips (-0.17%) to 0.6579, AUD/USD is down by 9 pips (-0.12%) to 0.7343, USD/CAD is up by 28 pips (+0.22%) to 1.3066
The forex calendar for the upcoming afternoon London/morning U.S. session only has a couple of items line up, but they’re all top-tier items, so gear up because me may be seeing a lot of volatility ahead.
Up first, at 1:30 pm GMT, we’ll get the headline (0.2% expected, 0.3% previous) and core (0.2% expected, 0.2% previous) readings for U.S. CPI. Do note that headline inflation is expected to tick lower, which may cause some forex traders to lose faith in a September rate hike and ease demand for the Grenback.
Oh, if you want a more in-depth look at this event, then I suggest that you head on over to Forex Gump’s forex trading guide.
Moving on, we’ll be getting the FOMC meeting minutes at around 7:00 pm GMT. Forex Gump already made a list of the main takeaways from the latest FOMC statement, but the meeting minutes is more detailed and may even hold some delicious hints on when a lift-off may take place as well as the members’ economic outlook and policy biases, so watch out for this one. You can read it here once it’s released. Stay frosty!
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