London Session Forex Recap – September 24, 2015

  • German GFK Consumer Sentiment: 9.6 actual v.s. 9.8 expected, 9.9 previous
  • French INSEE Manufacturing Confidence: 104 actual v.s. 103 expected, 103 previous
  • French BOF Business Sentiment: 100 actual v.s. 99 expected, 98 previous
  • German IFO Current Conditions: 114.0 actual v.s. 114.7 expected 114.8 previous
  • German IFO Expectations: 103.3 actual v.s. 101.4 expected, 102.2 previous
  • German IFO Business Climate: 108.5 actual v.s. 107.9 expected, 108.3 previous
  • U.K. BBA Mortgage Approvals: 46.7k actual v.s. 47.0k expected, 46.3K previous
  • ECB Target LTRO: €15.5B actual vs. €50.3B expected, €73.8B previous
  • U.S. durable goods order on tap
  • U.S. Fed Yellen has a speech later

The forex gods sure are fickle. They welcomed risk appetite with open arms during yesterday’s morning London forex session. But today, they decided to banish it to the forex abyss from whence it came. Due to the loss of risk appetite, forex traders were naturally compelled to flee to the sweet-haven currencies while leaving the higher-yielding ones for the crows. Pretty dramatic, eh?

Anyhow, European equities were back in the red with the DAX down by 2.02% to 9,419.50 and the FTSE 100 down by 0.68% to 5,991.50. U.S. equity futures were in bad shape as well, with the S&P 500 futures down by 0.89% to 1,911.00 and the NASDAQ futures down by 1.03% to 4,218.88. Most commodities were also back in the red, with the exception of gold, which was up by 0.34% to $1,135.40 per troy ounce due to the risk-off sentiment, and oil, which was being supported by bargain hunters, with Brent crude oil up by 0.21% to $47.85 per barrel during the forex session.

The high-yielding comdolls were naturally under pressure, thanks to the falling commodity prices. But, surprisingly enough, it was the Loonie that was at the bottom of the pecking order despite the higher oil prices during forex session. There weren’t any catalysts during the forex session, so it’s most likely that European forex traders were just pricing-in Canada’s dismal retail sales data from yesterday.

The Aussie, meanwhile, was the second weakest currency during the session, probably because the Australia and New Zealand Banking Group (ANZ) forecasted that the Reserve Bank of Australia (RBA) would need to cut rates at least twice in 2016. The ANZ also projected that the Aussie will be “sharply lower” next year. Ouch!

USD/CAD is up by 62 pips (+0.45%) to 1.3378, AUD/CAD is up by 18 pips (+0.20%) to 0.9315, NZD/CAD is up by 52 pips (+0.62%) to 0.8421

AUD/USD is down by 39 pips (-0.43%) to 0.6850, AUD/CHF is down by 52 pips (-0.77%) to 0.6765, AUD/JPY is down by 67 pips (-0.80%) to 83.15

NZD/USD is down by 7 pips (-0.12%) to 0.6277, NZD/CHF is down by 26 pips (-0.43%) to 0.6112, NZD/JPY is down by 33 pips (-0.44%) to 71.52

The high-yielding pound was feeling the heat too, even though BBA Mortgage Approvals showed a slight increase over the previous reading. Aside from the prevailing risk-off sentiment, there wasn’t really anything else that could explain that pound’s overall weakness, but some analysts attributed it to continued expectations of a delay for a highly anticipated Q1 2016 rate hike.

GBP/USD is down by 46 pips (-0.30%) to 1.5228, GBP/JPY is down by 127 pips (-0.69%) to 182.09, GBP/CHF is down by 110 pips (-0.73%) to 1.4808

As for the euro, it was mostly on the up and up, probably because it got a nice boost from a string of mostly positive data. I guess European forex traders were too concerned with Mario Draghi’s promise from yesterday that the ECB “would not hesitate to act” and introduce more easing measures “should some of the downwards risks weaken the inflation outlook over the medium term.” Well, Draghi did also say that it’s still too early for more stimulus, though.

EUR/USD is up by 45 pips (+0.41%) to 1.1249, EUR/NZD is up by 59 pips (+0.34%) to 1.7882, EUR/CAD is up by 129 pips (+0.88%) to 1.5051

The forex calendar for the upcoming afternoon London/morning U.S. session only has a few items on tap, but they’re either top-tier or mid-tier items, so be careful.

Up first, at 1:30 pm GMT, we’ll get the headline (-2.3% expected, 2.2% previous) and core (0.1% expected, 0.4% previous) readings for U.S. durable goods orders, as well as the reading for U.S. jobless claims (272K expected, 264K previous).

With regard to durable goods orders, do note that both readings are expected to worsen, which could mean lower overall production levels and consumer demand, so the Greenback may feel some selling pressure if the actual readings are within expectations or worse.

After that, at 3:00 pm GMT, we’ll get the figure for U.S. new home sales (516K expected, 507K previous). It’s expected to increase a bit, so if the actual reading meets or beats expectations, then we may see some demand for the Greenback.

Oh, U.S. Fed Chairperson Janet Yellen is also scheduled to give a speech at the University of Massachusetts way late into the U.S. session, at around 10:00 pm GMT. The Head of the U.S. Fed is gonna speak, guys, so make sure to keep an ear out for any juicy updates or hints on the future direction of monetary policy. 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.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis. Head on to Big Pippin’s Daily Chart Art for some pip-locking technical weeks!