London Session Forex Recap – August 28, 2015

  • Swiss Q2 GDP q/q: 0.2% actual v.s. -0.1% expected, -0.2% previous
  • Spanish Flash CPI: -0.4% actual v.s. -0.1% expected, 0.1% previous
  • French PPI m/m: -0.1% actual v.s. 0.1% previous
  • U.K. Index of Services m/m: 0.5% actual v.s. 0.4% expected, 0.2% previous
  • U.K. Q2 GDP (2nd Estimate): no revision at 0.7% as expected
  • U.K. Prelim Business Investment: 2.9% actual v.s. 1.6% expected, 2.0% previous
  • Euro Zone Consumer Sentiment: -6.9 actual v.s. -7.0 expected, -7.2 previous
  • Euro Zone Economic Sentiment: 104.2 actual v.s. 103.8 expected, 104.0 previous
  • Euro Zone Business Climate Index: 0.21 actual v.s. 0.34 expected, 0.41 previous

European market participants weren’t as optimistic as their Asian counterparts since risk aversion made a comeback during today’s morning London forex session. The DAX, for instance, was pushed 0.50% lower to 10,263.00 during the forex session. This broad decline among European equities most likely strangled demand for the euro, although the prevailing risk-off sentiment ultimately allowed the euro to win out against the higher-yielding currencies such as the comdolls and the pound.

EUR/USD is up by 4 pips (+0.04%) to 1.1269, EUR/AUD is up by 76 pips (+0.48%) to 1.5786, EUR/JPY is down by 24 pips (-0.18%) to 136.11

Speaking of the comdolls, they were naturally neglected in favor of the safe-haven currencies. Among the three major comdolls, the Aussie got hit the hardest, probably because of declining iron ore prices. And concerns over China’s economy, which caused the majority of economists polled by Reuters to project further easing moves before the end of the year. Although it could also just be profit-taking to avoid weekend risk.

AUD/USD is down by 29 pips (-0.41%) to 0.7137, AUD/JPY is down by 52 pips (-0.59%) to 86.23

NZD/USD is down by 17 pips (-0.27%) to 0.6446, NZD/CHF is down by 43 pips (-0.70%) to 0.6187

USD/CAD is up by 51 pips (+0.38%) to 1.3253, CAD/JPY is down by 56 pips (-0.61%) to 91.12

As for the pound, well, it was back on he defensive again (and losing ground) despite mostly positive data. This time, the pound was losing out to the safe-haven currencies while putting up a fight against the other high-yielders, even managing to somehow score a win against the weak Aussie.

GBP/USD is down by 33 pips (-0.21%) to 1.5384, GBP/CHF is down by 108 pips (-0.73%) to 1.4756, GBP/AUD is up by 47 pips (+0.22%) to 2.1555

Amoing the safe-haven currencies, European forex traders naturally chose to flee to the Swissy’s sweet and loving embrace, although the surprisingly better-than-expected reading for Switzerland’s Q2 GDP probably gave the Swissy a boost too.

USD/CHF is down by 51 pips (-0.53%) to 0.9589, EUR/CHF is down by 47 pips (-0.44%) to 1.0813, CAD/CHF is down by 60 pips (-0.85%) to 0.7238

The forex calendar for the upcoming afternoon London/morning U.S. session is filled to the brim with data points, so I’ll just point out the most important ones.

We’ll get data blitzed at 1:30 pm GMT with the simultaneous release of Canada’s RMPI (-4.0% expected, 0.0% previous) plus Uncle Sam’s trade balance (-62.3B previous), core PCE price index (0.1% expected, 0.1% previous), and personal spending (0.4% expected, 0.2% previous).

RMPI or the raw materials price index is a gauge for production and also leading indicator for consumer spending and inflation. It’s expected to decline, which is a bad thing, so pay attention if you happen to be bullish on the Loonie.

After that, at 3:00 pm GMT, forex traders will get the the various consumer surveys from the University of Michigan: consumer sentiment (93.0 expected, 92.9 previous), consumer expectations (83.8 previous), current conditions (107.1 previous). Do note that consumer sentiment is expected to be revised higher, which may possibly convince dollar bulls to jump in.

We’ll then have a central banker bonus round at 5:25 pm GMT since SNB Governing Board Chairman Thomas Jordan will speak in a panel discussion about US inflation developments at the 2015 Economic Symposium. You know the drill, guys: keep an ear out for any hints on future monetary policy or updates on economic outlook.

Oh, we’re not done yet since we still have another central banker speaker lined up. This time, Federal Reserve Bank of Atlanta President Dennis Lockhart is scheduled for an interview with Bloomberg at the Jackson Hole Symposium around 7:15 pm GMT.Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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