London Session Forex Recap – September 4, 2015

  • German Factory Orders m/m: -1.4% actual v.s. -0.6% expected, 1.8% previous
  • French INSEE Consumer Confidence: 93 actual v.s. 94 expected, 93 previous
  • Swiss CPI m/m: -0.2% as expected v.s. -0.6% previous
  • Swiss CPI y/y: -1.4% as expected v.s. -1.3% previous
  • Swiss HICP m/m: -0.6% actual v.s. 0.0% expected, -0.2% previous
  • Euro Zone Retail PMI: 51.4 actual v.s. 54.2 previous
  • U.S. and Canadian jobs data coming up

It’s another NFP Friday, so all was calm in the forex front during today’s morning London forex session, with most currency pairs contently milling about in tight ranges. The only noticeable movers were the Japanese yen and the Swiss franc, and the Swissy didn’t even really move that much.

Risk aversion began to spread across the European markets like a plague during the forex session. Some analysts attributed the risk-off sentiment to ECB President Mario Draghi’s not-too-positive press conference yesterday as well as jitters over whether today’s jobs data will keep the U.S. on track for a highly-anticipated rate hike and lingering concerns over China. And it didn’t help that ECB Governing Council member Ewald Nowotny warned that “It is very possible that we in the euro area will in the next month or months get into negative territory once or twice.”

As a result of the risk aversion, many forex traders fled to the Japanese yen, which is now apparently the de facto safe-haven currency of choice for most forex traders. Demand for the safe-haven yen was so strong that forex traders were unfazed by statements from the IMF’s mission chief to Japan wherein she apparently said that the IMF may cut Japan’s economic growth forecasts for 2015 and 2016. Forex traders were also unaffected when Reuters released its poll results, showing that most participants expected Japan’s Q2 GDP to be revised lower next week.

USD/JPY is down by 49 pips (-0.41%) to 119.03, CHF/JPY is down by 63 pips (-0.51%) to 122.19, GBP/JPY is down by 77 pips (-0.43%) to 181.31

The Swiss franc, meanwhile, got little love from forex traders since it was mostly weak during the forex session, probably because of Switzerland’s poor inflation readings. Although we can’t dismiss the possibility that the Swiss National Bank is sneakily following its mandate to weaken the Swiss franc again.

USD/CHF is up by 13 pips (+0.13%) to 0.9744, EUR/CHF is up by 21 pips (+0.20%) to 1.0853, GBP/CHF is up by 15 pips (+0.10%) to 1.4837

As for the euro, it was pretty much well-behaved during the forex session despite the DAX dropping by a whopping 2.12% to 10,099.50 and German 10-year bond yields tightening by 5.75% to 0.689% due to round of bond-buying during the forex session. The slump in retail PMI for the entire euro zone and ECB Nowotny’s warnings that I alluded to earlier didn’t seem to have an effect on the euro as well.

EUR/USD is up by 6 pips (+0.05%) to 1.1136, EUR/AUD is up by 7 pips (+0.05%) to 1.5948, EUR/NZD is up by 10 pips (+0.06%) to 1.7491

Okay, do y’all know what day it is? That’s right! It’s another NFP Friday! So I bet y’all already know that the forex calendar for the upcoming afternoon London/morning U.S. session is gonna be a heavy one. Let’s get cracking!

We’ll get a data bomb at 1:30 pm GMT since we’ve got a bunch of heavy-hitters lined up. For Canada, we’ll get the readings for net employment change (-5.0K exepected, 6.6K previous), the jobless rate (6.8% expected, 6.8% previous), and labor productivity (-0.8% expected, -0.1% previous). And for Uncle Sam, we’ll get the readings for non-farm payrolls (217K expected, 215K previous), private payrolls (204K expected, 210K previous), the average hourly earnings (0.2% expected, 0.2% previous), and the jobless rate (5.2% expected, 5.3% previous).

In the case of U.S. non-farm payrolls, do note that ADP’s jobs survey failed to meet the market’s expectations, so perhaps some forex traders are expecting that today’s non-farm payrolls will follow the same route, so be careful if you have open positions or orders on the Greenback. And if you want a more in-depth write-up, you can still check out Forex Gump’s Forex trading Guide for U.S. NFP and Canada’s jobs report.

The last item on our list is Canada’s Ivey PMI reading (53.3 expected, 52.9 previous), which is scheduled for release at around 3:00 pm GMT. Do note that it is still above the 50.0 neutral mark, and it is expected to increase further, so if the actual reading meets or beats the market’s expectations, then perhaps we’ll see some demand for the Loonie. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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