London Session Forex Recap – August 27, 2015

  • U.K. Nationwide HPI m/m: 0.3% actual v.s. 0.4% expected, 0.4% previous
  • German Import Price Index: -0.7% actual v.s. -0.3% expected v.s. -0.5% previous
  • French INSEE Manufacturing Index: 103 actual v.s. 102 expected, 102 previous
  • Swiss Industrial Production y/y: -2.5% actual v.s. -0.5% previous
  • Euro Zone M3 Money Supply: 5.3% actual v.s. 4.9% expected, 4.9% previous
  • Chinese equities broke 5-day losing streak

Chinese equities were under the spotlight yet again during today’s morning London forex session. This time, market participants were overjoyed that Chinese equities were able to break their 5-day losing streak, with the Shanghai Composite Index up by 5.34% for the day.

Investors were so optimistic that they just shrugged off reports that the Chinese government was sneakily propping up Chinese equities in order to avoid further loss of confidence on the Chinese economy.

In any case, this risk-on sentiment also spread to the European markets, with the DAX up by a solid 2.96% to 10,294.30 for the forex session. The euro felt little love, though, probably because of the poor reading for Germany’s import price index. Although it’s also possible that European forex traders got rattled when European Stability Mechanism Head Klaus Regling expressed earlier that the threat of a Grexit still exists.

EUR/USD is down by 43 pips (-0.38%) to 1.1285, EUR/AUD is down by 160 pips (-1.00%) to 1.5768, EUR/CAD is down by 153 pips (-1.02%) to 1.4894

European forex traders may have scorned the euro, but they sure gave all the high-yielding comdolls a lot of love. Among the three major comdolls, the Loonie got the most loving, most likely because of a surge in oil prices. Brent crude oil, in particular, was up by 3.36% to $44.59 per barrel during the session.

AUD/USD is up by 34 pips (+0.48%) to 0.7145, AUD/CHF is up by 40 pips (+0.60%) to 0.6813, AUD/CAD is down by 10 pips (-0.11%) to 0.9435

NZD/USD is up by 15 pips (+0.23%) to 0.6459, NZD/JPY is up by 19 pips (+0.25%) to 77.65, NZD/CAD is down by 22 pips (-0.26%) to 0.8537

USD/CAD is down by 75 pips (-0.57%) to 1.3207, CAD/CHF is up by 46 pips (+0.65%) to 0.7217, CAD/JPY is up by 44 pips (+0.49%) to 90.93

As for the pound, well, it got hit hard again despite the FTSE 100 advancing by 2.42% to 6,123.80 during the forex session. The only possible direct catalyst for the weakness was the downtick in nationwide HPI, but I don’t think that’s the true catalysts since that economic data point is considered low-tier.

Judging on how the price action for pound pairs went down, it looks like the pound’s weakness was due to continued softness against the comdolls since the pound managed put up a fight against the safe-haven currencies.

GBP/USD is down by 34 pips (-0.22%) to 1.5453, GBP/AUD is down by 151 pips (-0.69%) to 2.1623, GBP/CAD is down by 161 pips (-0.78%) to 2.0407

The forex calendar for the upcoming afternoon London/morning U.S. session has some heavy-hitters lined up, so let’s get cracking.

We’ll begin with a data dump at 1:30 pm GMT, thanks to the simultaneous release of various U.S. economic data points: the preliminary reading for Q2 U.S. GDP (3.2% expected, 2.3% previous), the headline (2.0% expected, 2.0% previous) and core (1.8% expected, 1.8% previous) readings for the GDP price index, and the number of jobless claims (274K expected, 277K previous).

The most likely market-mover would be the preliminary reading for Q2 U.S. GDP since it’s a top-tier item and it is expected to show a significant upward revision over the advanced reading, so keep a close eye on it.

At the same time, forex traders will also get the reading for Canada’s corporate profits (-6.0% previous). It’s a low-tier item, though, so don’t expect the Loonie to react much.

Finally, at 3:00 pm GMT, we’ll get the reading for Uncle Sam’s pending home sales (1.0% expected, -1.8% previous). This housing market indicator is expected to show a significant improvement, so perhaps U.S. dollar bulls may be convinced to start loading up if the actual reading meets or beats expectations.

Oh, today is also the first day for the Jackson Hole Symposium. If you don’t know what it’s all about (and you wanna know what it’s all about), then I suggest that you head on over to Forex Gump’s write-up and read up. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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