London Session Forex Recap – September 16, 2015

  • U.K. Jobless Rate: 5.5% actual v.s. 5.6% expected, 5.6% previous
  • U.K. Claimant Count Change: 1.2K actual v.s. -5.1K expected, -6.8K previous
  • U.K. Average Earnings Index: 2.9% actual v.s. 2.5% expected, 2.6% previous
  • Swiss ZEW Economic Expectations: 9.7 actual v.s. 5.9 previous
  • Euro Zone Final Headline CPI y/y: 0.1% actual v.s. 0.2% expected, 0.2% previous
  • Euro Zone Final Core CPI y/y: 0.9% actual v.s. 1.0% expected, 1.0% previous
  • U.S. CPI coming up

Forex traders had their sights on the pound since the U.K. jobs report for August was the only top-tier item that came out during today’s morning London forex session. Hopefully, you were able to read up on Forex Gump’s Forex Trading Guide and profit from this event. If not, well, there’s still tomorrow’s U.K. retail sales report. You can check out Forex Gump’s write-up for that event here.

And with that shameless promotion of my buddy out of the way, let me just say that the pound was giving all of its forex rivals a good pounding throughout the forex session, thanks to the better-than-expected readings for the jobless rate and the average earnings index. The average earnings index, in particular, grew at the fastest pace in six years!

The claimant count change saw an increase, though, which means that more people were claiming unemployment benefits, but forex traders didn’t seem to mind since they were probably more concerned with the positive reading for wage growth, which helps to support a potential rate hike by Q1 2016 since higher wages usually means higher consumer spending and higher inflation rates down the road.

GBP/USD is up by 95 pips (+0.62%) to 1.5436, GBP/JPY is up by 158 pips (+0.86%) to 186.15, GBP/CHF is up by 140 pips (+0.94%) to 1.5053

The pound wasn’t the only mover, however, since the euro was also moving hard and fast… to the downside.

The euro was already showing signs of weakness at the German open, and the weakness only intensified during the course of the forex session. The main culprits for the euro’s weakness were of course the disappointing CPI readings caused by the lower price levels for transport fuel and heating oil.

But I also think that the euro was being dragged down by counter-curency price action, namely the skyrocketing pound. In simpler terms, forex traders were dumping the euro in favor of the pound since the euro was losing very hard to the pound, with EUR/GBP down by 78 pips (-1.05%) to 0.7273.

It’s also possible that the claims of some analysts about the euro emerging as a new safe-haven is right since risk appetite pushed the DAX higher by 0.76% to 10,265.50 during the forex session, and yet demand for the euro was practically non-existent.

EUR/USD is down by 52 pips (-0.46%) to 1.1224, EUR/JPY is down by 35 pips (-0.26%) to 135.29, EUR/AUD is down by 65 pips (-0.41%) to 1.5682

As for the other currencies worth noting, we have the Greenback. The Greenback was actually grinding higher for most of the forex session, even though there weren’t really any direct catalysts. It could be pre-emptive positioning, but I doubt it since Uncle Sam’s top-tier item for later is expected to worsen. Maybe some forex traders know something? Well, whatever the case may be, the fact of the matter is that the Greenback was going up during the forex session.

USD/JPY is up by 28 pips (+0.24%) to 120.58, USD/CAD is up by 16 pips (+0.11%) to 1.3241, USD/CHF is up by 36 pips (+0.38%) to 0.9757

The forex calendar for the upcoming afternoon London/morning U.S. session has Uncle Sam’s headline (-0.1% expected, 0.1% previous) and core (0.1% expected, 0.1% previous) CPI readings scheduled for release at 1:30 pm GMT, and it doesn’t look pretty for the Greenback since the headline reading is expected to deteriorate, so keep a very close eye on this item, especially with the FOMC meeting looming ever closer.

Also at 1:30 pm GMT, we’ll get the reading for Canada’s manufacturng sales (1.1% expected, 1.2% previous). It’s expected to slow down a bit, so the Loonie may feel some selling pressure if the actual reading decline as expected or worse.

After that, at 3:00 pm GMT, we’ll get the U.S NAHB builders survey (61 expected, 61 previous). This indicator for the housing market is expected to remain unchanged, so the Greenback may react if the actual reading comes in differently. But then again, this is considered a mid-tier item at best, so perhaps the Greenback won’t react at all.

Also, way late into the U.S. session, at around 11:45 pm GMT, forex trader are gonna get New Zealand’s GDP (0.6% expected, 0.2% previous). It’s expected to grow at an improved rate, so perhaps some forex traders may be convinced to load up on the Kiwi if the actual reading meets or beats expectations.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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