London Session Forex Recap – September 23, 2015

  • French Final GDP y/y: 1.1% actual v.s. 1.0% expected, 1.0% previous
  • French Flash Services PMI: 51.2 actual v.s. 51.0 expected, 50.6 previous
  • French Flash Manufacturing PMI: 50.4 actual v.s. 48.6 expectedm 48.3 previous
  • German Flash Services PMI: 54.3 actual v.s. 54.5 expected, 54.9 previous
  • German Flash Manufacturing PMI: 52.5 actual v.s. 52.6 expected, 53.3 previous
  • Euro Zone Flash Services PMI: 54.0 actual v.s. 54.2 expected, 54.4 previous
  • Euro Zone Flash Manufacturing PMI: 52.0 as expected v.s. 52.3 previous
  • Canadian retail sales data on tap
  • ECB Draghi’s testimony coming up

Today’s morning London forex session started on a quiet note, but it soon became apparent that there a was a clear reversal of fortunes for the safe-havens and the higher-yielding currencies due to returning risk appetite.

All’s right with the world (during the forex session at least) since the DAX was up by 1.05% to 9,671.50 and the FTSE 100 was up by 1.82% to 6,044.00. U.S. equity futures weren’t doing too bad either, with the S&P 500 futures up by 0.49% to 1,941.50 and the NASDAQ futures up by 0.54% to 4,290.12. Commodities were broadly in the green too, with Brent crude oil up by 0.66% to $49.41 per barrel.

Yep, it was all about sunshine, lollipos, and rainbows during the European session, which is why forex traders dumped most of the safe-haven currencies and began loading up on the higher-yielding ones.

And due to the broad commodity rally, European forex traders naturally gave all of the comdolls some much-needed loving. Apparently, European forex traders weren’t fazed by the poor reading for China’s Caixin-Markit manufacturing PMI from earlier.

NZD/USD is up by 28 pips (+0.46%) to 0.6301, NZD/CHF is up by 26 pips (+0.43%) to 0.6145, NZD/JPY is up by 38 pips (+0.51%) to 75.69

AUD/USD is up by 13 pips (+0.18%) to 0.7057, AUD/CHF is up by 11 pips (+0.17%) to 0.6884, AUD/JPY is up by 21 pips (+0.26%) to 84.82

USD/CAD is down by 21 pips (-0.16%) to 1.3246, GBP/CAD is down by 94 pips (-0.46%) to 2.0280, CAD/JPY is up by 23 pips (+0.26%) to 90.70

The pound is a high-yielder too, but it was losing ground to all its forex rivals throughout the forex session, including the safe-havens. There weren’t any direct catalysts that could account for the broad weakness, but some analysts attributed it to continued disappointment with yesterday’s budget deficit, which was the biggest ever since August 2012. Meanwhile, other analysts pointed to speculation that recent developments would force the Bank of England (BOE) to delay a potential Q1 2016 rate hike. Well, whatever the case may truly be, the fact remains that the pound was getting a severe beating during the forex session.

GBP/USD is down by 51 pips (-0.33%) to 1.5304, GBP/JPY is down by 46 pips (-0.25%) to 183.87, GBP/CHF is down by 56 pips (-0.37%) to 1.4925

As for thee euro, it was mostly up for the session, thanks, perhaps, to a nice performance from the DAX (and the other euro zone equity markets) and a slew of mostly optimistic PMI readings for the euro zone, which were all still above the 50.0 neutral mark.

EUR/USD is up by 25 pips (+0.23%) to 1.1161, EUR/GBP is up by 39 pips (+0.54%) to 0.7288, EUR/JPY is up by 48 pips (+0.36%) to 134.17

The forex calendar for the upcoming afternoon London/morning U.S. session has a lot in store for us, so y’all better buckle up.

Up first, at 1:30 pm GMT, we’ll get the headline (0.7% expected, 0.6% previous) and core (0.5% expected, 0.8% previous) readings for Canada’s retail sales. Do note that the former is expected to increase while the latter is expected to decrease by a lot, so make sure to keep an eye on the Loonie.

Shortly after that, at 2:00 pm GMT, we’ll hear ECB President “Super” Mario Draghi’s testimony on monetary policy before hte European Parliament’s Economic and Monetary Committee. Make sure to keep an ear open for this one, especially on the future direction of monetary policy and whether further easing is required.

Next, forex traders will get the Markit’s flash manufacturing PMI (52.8 expected, 53.0 previous) for uncle Sam at around 2:45 pm GMT. It’s expected to deteriorate a bit, but it may or may not cause a reaction in the markets since most forex traders and analysts give more weight to the PMI readings from the Institute for Supply Management (ISM).

We’ll then get a level of crude oil inventories (-1.0M expected, -2.1M previous) in the U.S. at 3:30 pm GMT. This usually affects the Loonie’s forex price action, though.

Finally, forex traders will get treated to two central banker bonus rounds, with BOE Deputy Governor Ben Broadbent’s speech on the U.K. labor market at around 5:00 pm GMT and Atlanta Fed President Dennis Lockhart’s speech at the Columbus Rotary Club at around 5:30 pm GMT.

Do play extra attention to BOE BroadBent’s speech since he may give some insights on the state of U.K. economy and whether a rate hike or rate cut would be the BOE’s most likely move. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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  • Jayboii478

    Don’t tell me this, I’m in on the GBPCAD because I saw oil was weaking and got a nice technical setup for a long on the pair.. 🙁 this sounds bad for the GBP and it isn’t looking good now!! lol