London Session Forex Recap – September 11, 2015

  • German Wholesale Price Index m/m: -0.8% actual v.s. 0.2% expected, 0.1% previous
  • German HICP y/y: 0.1% as expected, same as previous
  • German CPI y/y: 0.2% as expected, same as previous
  • French Current Account: -€0.4B actual v.s. €1.0B previous
  • Italian Industrial Production m/m: 1.1% actual v.s. 0.9% expected, -1.0% previous
  • U.K. Constructon Output m/m: -1.0% actual v.s. 0.5% expected, 0.9% previous
  • U.S. headline and core PPI on tap

Today’s morning London forex session was rather subdued, but it was a bit more active than the earlier Asian forex session since a few currencies were clearly on the move.

First up is the Swissy, which was pretty weak across the board during the forex session. There weren’t any direct catalysts that could account for the weakness, though, so perhaps the Swiss National Bank is up to its old antics of weakening the Swiss franc again.

USD/CHF is up by 52 pips (+0.54%) to 0.9780, EUR/CHF is up by 41 pips (+0.38%) to 1.1018, GBP/CHF is up by 52 pips (+0.35%) to 1.5077

Next up is the euro. The euro was mostly weak during the forex session, probably because of a slew of mostly disappointing data and European Central Bank Executive Board member Benoit Coeure’s pessimistic statement that “Growth is still not strong enough to create a sufficient number of jobs.”

Another possible reason for the dampened demand for the euro was the DAX stumbling by 0.80% to 10,128.50 and German 10-year bond yields contracting by 5.11% to 0.669% during the forex session. Of course, it could also simply have been profit-taking by short-term forex traders in order to avoid weekend risk. After all, most euro pairs were up for the week.

EUR/USD is down by 20 pips (-0.18%) to 1.1264, EUR/JPY is down by 26 pips (-0.20%) to 135.92, EUR/AUD is down by 28 pips (-0.18%) to 1.5953

Next one on the lineup is the pound. Like the euro, it too was mostly weak for the forex session. It could have been a reaction to U.K. construction output posting a significantly worse-than-expected reading, but that’s a low-tier item, so I highly doubt it. It could also have been short-term forex traders unwinding their log positions in order to avoid weekend risk. After all, most pound pairs were also up for the week. Some analysts were pointing to possible pre-emptive positioning ahead of Saturday’s U.K. opposition vote, however.

GBP/USD is down by 29 pips (-0.19%) to 1.5415, GBP/JPY is down by 42 pips (-0.23%) to 186.00, GBP/CAD is down by 22 pips (-0.11%) to 2.0431

As for the other currencies, most Aussie pairs were ranging, with AUD/USD down by 3 pips (-0.04%) to 0.7058. The Kiwi, meanwhile, was mixed but mostly down, with NZD/USD down by 25 pips (-0.39%) to 0.6288. As for the Loonie, it too was mixed but mostly up, which was rather strange because oil prices were down during the session due to Goldman Sachs cutting its forecasts, with Brent crude oil down by 2.29% to $47.77 per barrel during the forex session.

The forex calendar for the upcoming afternoon London/morning U.S. session only has a few items lined up, but they’re mostly heavy-hitters, so y’all better gt your game face on.

We’ll start the session hard at 1:30 pm GMT, with the release of U.S. headline (-0.1% expected, 0.2% previous) and core (0.1% expected, 0.3% previous) PPI readings. Do note that both U.S. PPI readings are expected to deteriorate, so keep an eye on the Greenback.

After that, at 3:00 pm GMT, forex traders will get the preliminary readings for the University of Michigan’s consumer surveys for the month of September, with readings for consumer expectations (82.8 actual v.s. 83.4 previous), consumer sentiment (91.1 expected, 91.9 previous), and current conditions (103.6 expected, 105.1 previous) on tap.

I just want to point out that forex traders usually have their sights on the reading for consumer sentiment, and it is expected to decline a bit, so we may see some Greenback weakness if the actual reading comes in as expected or worse.

Finally, at 7:00 pm GMT, we’ll get a glimpse at the U.S. Federal budget (-$77B expected, -$149.2B previous). Take note that the budget deficit is expected to shrink, but this is usually considered a low-tier item, so it may not move the market much. Still, it’s better to know what’s comin’ at ya, right? Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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