London Session Forex Recap – August 31, 2015

  • The U.K. is on a bank holiday today
  • German Retail Sales m/m: 1.4% actual v.s. 1.2% expected, -2.3% previous
  • German Retail Sales y/y: 3.3% actual v.s. 1.5% expected, 5.1% previous
  • Swiss KOF Leading Indicator: 100.7 as expected v.s. 100.4 previous
  • Italian Retail Sales: -0.3% actual v.s. 0.1% expected, -0.2% previous
  • Italian Preliminary CPI m/m: 0.2% as expected v.s. -0.1% previous
  • Euro Zone Flash HICP: 0.2% actual v.s. 0.1% expected, 0.2% previous
  • Euro Zone Flash Core HICP: 1.0% actual v.s. 0.9% expected, 1.0% previous

Thanks to the summer bank holiday in the U.K., both volatility and directional movement were somewhat in short supply during today’s morning London forex session. In fact, the only currency moving in a clear direction was the Swissy.

The Swissy was broadly weak during the forex session, which is rather surprising since the KOF leading indicator posted an improvement over the previous reading as expected. Perhaps the Swiss National Bank (SNB) is taking advantage of the lull in trading activity by sneakily weakening the Swissy again. After all, SNB Chairman of the Governing Board Thomas Jordan reiterated in his speech at the Jackson Hole Symposium that while “the Swiss franc is an asset to the Swiss economy, its strength has repeatedly put pressure on the export sector and the consumer price level,” so the SNB’s monetary policy is “to weaken the Swiss franc over time and the central bank has also made clear that it will remain active in the foreign exchange market, if necessary.”

USD/CHF is up by 33 pips (+0.35%) to 0.9648, GBP/CHF is up by 45 pips (+0.30%) to 1.4870, EUR/CHF is up by 21 pips (+0.20%) to 1.0813

As for other currencies of note, the euro was mixed but mostly weak during the forex session despite a slew of mostly positive economic data points for the euro zone. There were no major news events or economic data points that could account for the broad weakness, but the DAX was down by 0.62% 10,234.50 during the forex session. Perhaps that dampened demand for the euro.

EUR/USD is down by 18 pips (-0.17%) to 1.1204, EUR/JPY is down by 8 pips (-0.06%) to 135.89, EUR/CAD is down by 23 pips (-0.16%) to 1.4842

The Loonie was mixed too, but showed some strength overall despite the prevailing risk-off sentiment and another round of declining oil prices, with Brent crude oil down by 2.22% to $48.94 per barrel during the forex session. There was a report about a survey conducted by Consensus Economics wherein the participating economists cut Canada’s growth projections, which would put Canada into a technical recession, but that is bad news that should have weakened the Loonie. Again, very strange price action for the Loonie pairs during the forex session.

USD/CAD is down by 3 pips (-0.02%) to 1.3241, GBP/CAD is down by 17 pips (-0.09%) to 2.0402, AUD/CAD is down by 12 pips (-0.14%) to 0.9440

The forex calendar for the upcoming afternoon London/morning U.S. session is a bit on the light side since we only have two mid-tier items on tap.

Up first, at 1:30 pm GMT, is Canada’s current account (-16.9B expected, -17.5B previous). This econoic indicator measures the sum of the balance of trade, net investment income, and net current transfers. A surplus is considered good for the economy and the currency, so do note that the deficit is expected to shrink a wee bit. This should be good news for the Loonie, but given how the Loonie has been acting during the morning London forex session, it could have the opposite effect or no effect at all.

Next, at 2:45 pm GMT, we’ll get the Chicago PMI (54.5 expected, 54.7 previous) for Uncle Sam. Do note that the actual reading is expected to deteriorate a bit, so watch it if you are bullish on the Greenback.

Forex traders will also be getting New Zealand’s terms of trade (-2.5% expected, 1.4% previous) way late into the U.S. session at around 11:45 pm GMT. Do note that it is expected to deteriorate, but it’s considered a low-tier item, so it may not have an effect on the Kiwi. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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