London Session Forex Recap – September 15, 2015

  • French CPI y/y: 0.0% actual v.s. 0.1% expected, 0.2% previous
  • U.K. CPI m/m: 0.2% as expected v.s. -0.2% previous
  • U.K. CPI y/y: 0.0% as expected v.s. 0.1% previous
  • U.K. RPI y/y: 1.1% actual v.s. 0.9% expected, 1.0% previous
  • U.K. PPI Input m/m: -2.4% actual v.s. -2.3% expected, -1.2% previous
  • German ZEW Current Conditions: 67.5 actual v.s. 64.0 expected, 65.7 previous
  • German ZEW Economic Sentiment: 12.1 actual v.s. 18.3 expected, 25.0 previous
  • Euro Zone ZEW Economic Sentiment: 33.3 actual v.s. 42.1 expectedm 47.6 previous
  • Euro Zone Trade Balance: €22.4B actual v.s. €21.4B expected, €21.9B previous
  • U.S. retail sales data coming up

There were a ton of data during today’s morning London forex session, but directional movement and volatility were both disappointingly in short supply. In fact, the only clear mover was the Kiwi.

The Kiwi was grinding its way higher across the board throughout the entire forex session, which was rather strange. Although most Kiwi pairs were actually consolidating if you take the price action from the earlier Asian forex session (and the previous days’ forex price action) into account.

Still, it was strange that the Kiwi was on the move since there weren’t any direct catalysts that could explain the Kiwi’s strength during the session and the Kiwi is fundamentally weak due to the recent rate cut and the RBNZ’s openness to future rate cuts.

It’s just an educated guess, but perhaps technicals-based traders were just playing the ranges. It’s also possible that event junkies were betting that the outcome for today’s dairy auction would be a positive one. Well, whatever the case may truly be, the fact remains that the Kiwi was strong across the board during the forex session.

NZD/USD is up by 27 pips (+0.44%) to 0.6334, NZD/JPY is up by 33 pips (+0.45%) to 75.82, NZD/CHF is up by 26 pips (+0.43%) to 0.6143

Looking at the European stock markets, it seems like some risk appetite was in play since most European equity indices were staging a weak rally during the forex session, with the DAX up by 0.38% to 10,170.50. This probably created some demand for the euro despite the mixed euro zone data.

EUR/USD is up by 20 pips (+0.18%) to 1.1309, EUR/JPY is up by 19 pips (+0.15%) to 135.33, EUR/GBP is up by 7 pips (+0.10%) to 0.7333

The prevailing risk-on sentiment was also probably the reason why the higher-yielding currencies were edging higher against the safe-haven currencies. Moreover, the Loonie likely got a nice boost from the surge in oil prices, with Brent crude oil up by 0.53% to $47.60 per barrel during the forex session.

AUD/USD is up by 13 pips (+0.17%) to 0.7127, AUD/JPY is up by 15 pips (+0.18%) to 85.31, AUD/CHF is up by 14 pips (+0.20%) to 0.6913

USD/CAD is down by 16 pips (-0.13%) to 1.3242, CAD/JPY is up by 9 pips (+0.11%) to 90.37, CAD/CHF is up by 8 pips (+0.11%) to 0.7322

As for the pound, inflation readings were mostly within expectations and the FTSE 100 was only up by a measly 0.04% to 6,086.80 during the forex session, but the high-yielding pound was able to slightly win out against the safe-haven currencies, too.

GBP/USD is up by 18 pips (+0.12%) to 1.5426, GBP/JPY is up by 13 pips (+0.07%) to 184.33, GBP/CHF is up by 14 pips (+0.10%) to 1.4959

The forex calendar for the upcoming afternoon London/morning U.S. session has a mix of top-tier and mid-tier U.S. data all lined up, so make sure to pay extra attention to the Greenback, although U.S. traders will also probably try to price-in the data points from earlier, especially the U.K. inflation readings. And with that said, let’s get this show on the road!

At 1:30 pm GMT, we’ll start the forex session running with the release of the headline (0.3% expected, 0.6% previous) and core (0.2% expected, 0.4% previous) readings for U.S. retail sales. Do note that the readings for this top-tier item are both expected to decline, so the Greenback may weaken if the actual readings come in as expected or worse given the uncertainty of the September 17 rate hike looming ever closer.

Also at 1:30 pm GMT, forex traders will get the result for the Empire State manufacturing survey (-0.5 expected, -14.9 previous). Do note that the market expects manufacturing conditions in New York state to continue deteriorating, albeit at a slower rate, so an upside surprise may create some demand for the Greenback, but most forex traders would probably be focusing on the retail sales data.

After that, at 2:15 pm GMT, we’ll get the reading for U.S. capacity utilization (77.8% expected, 78.0% previous) and industrial production (-0.2% expected, 0.6% previous), and it doesn’t look good for the Greenback since both indicators are expected to deterioate.

Finally, 3:00 pm GMT, we’ll get the reading for U.S. business inventories (0.1% expected, 0.8% previous), and it’s expected to contract, which is a good thing since it means that inventory turn-over was quicker due to higher demand.

Oh, we’ll also get New Zealand’s current account (-$1.50B expected, $0.66B previous) way late into the U.S. session at around 11:45 pm GMT, and it’s expected to deteriorate, so the recently strong Kiwi may see some selling pressure.

And don’t forget that a dairy auction is currently underway, so make sure to keep an eye on that since the outcome may put a cap on the Kiwi’s gains or help it to climb higher. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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