London Session Forex Recap – September 30, 2015

  • German Retail Sales m/m: -0.4% actual v.s. 0.2% expected, 1.6% previous
  • U.K. Nationwide HPI m/m: 0.5% actual v.s. 0.4% expected, 0.3% previous
  • Swiss KOF Economic Barometer: 100.4 actual v.s. 101.0 expected, 100.7 previous
  • German Unemployment Change: 2K actual v.s. -5K expected, -6K previous
  • U.K. Current Account: -£16.8B actual v.s. -£22.0B expected, -£24.0 previous
  • U.K. Final GDP q/q: no revision at 0.7% as expected
  • U.K. Final GDP y/y: 2.4% actual v.s. 2.6% expected, 2.6% previous
  • Euro Zone Headline Flash CPI y/y: -0.1% actual v.s. 0.0% expected, 0.1% previous
  • Euro Zone Core Flash CPI y/y: 0.9% as expected same as previous
  • Euro Zone Jobless Rate: 11.0% actual v.s. 10.9% expected, 11.0% previous
  • ADP report and Canadian GDP coming up
  • U.S. Fed Chairperson Yellen has a speech for later

A lot of economic reports were released during today’s morning London forex session, but it seems like market sentiment was influencing price action for the most part.

Risk appetite planted its flag deep into the ground (figuratively speaking, of course), with the DAX up by a solid 2.58% to 9,694.50 during the forex session. Naturally, it was another glorious day for the higher-yielding currencies while the safe-havens couldn’t really do anything but whimper (figuratively speaking, of course) at the lack of demand.

Most commodities were in the green again as well, although oil prices were buckling the trend due to a buildup in U.S. crude oil inventories, with Brent crude oil down by 0.45% to $48.02 per barrel. The higher inventory levels hint at either a lack of demand for oil or a possible oversupply, neither of which are goods news for an oil-producing country like Canada, which is probably why the Loonie was the weakest link among the high-yielding comdolls. Although it’s also possible that forex traders were opening pre-emptive positions ahead of Canada’s GDP reading since it’s expected to deteriorate a bit.

USD/CAD is down by 25 pips (-0.19%) to 1.3400, NZD/CAD is up by 7 pips (+0.08%) to 0.8553, AUD/CAD is up by 33 pips (+0.36%) to 0.9425

Just like yesterday’s morning London forex session, the yen was once again at the receiving end of a severe beat-down from the higher-yielders AND its fellow safe-havens. Talk about weak! Again, there were no direct catalysts that could explain the yen’s weakness, but it’s highly possible that European forex traders were pricing-in Japan’s weak industrial production and poor retail sales reading from earlier. It’s also possible that yen bulls got the jitters when analysts began making forecasts of more easing measures from the BOJ.

USD/JPY is up by 25 pips (+0.21%) to 120.24, AUD/JPY is up by 60 pips (+0.71%) to 84.52, GBP/JPY is up by 92 pips (+0.50%) to 182.57

As for the euro, it started the forex session on a weak footing, thanks perhaps to the disappointing reading for German retail sales. It then only went downhill from there, as one economic report after another began posting downbeat readings, which understandably dampened demand for the euro.

It finally culminated in a painful double whammy when the jobless rate for the entire euro zone ticked higher while the annualized inflation reading dipped back into negative territory. Ouch! It wasn’t a complete rout for the euro, though – it still managed to win out against the Japanese yen.

EUR/USD is down by 12 pips (-0.11%) to 1.1208, EUR/GBP is down by 29 pips (-0.40%) to 0.7380, EUR/JPY is up by 18 pips (+0.13%) to 134.81

The high-yielding pound, meanwhile, was mostly on the up and up. Aside from the prevailing risk-on sentiment, perhaps the main contributor to demand for the pound was the better-than-expected reading for current account. Of course, it’s also possible that the big players who have been shorting the pound were taking some profits off the table or maybe they were doing some positioning. It’s the last day of September, after all.

GBP/USD is up by 45 pips (+0.30%) to 1.5186, GBP/CHF is up by 28 pips (+0.20%) to 1.4786, GBP/CAD is up by 31 pips (+0.16%) to 2.0356

The forex calendar for the upcoming afternoon London/morning U.S. session has a lot of hard-hitting items lined up, so get ready.

We’ll start at 1:15 pm GMT with the U.S. ADP employment survey (190K expected, 190K previous). This leading indicator for Friday’s NFP report is expected to post the same increase as last time, so a different reading may cause a reaction from the Greenback. By the way, if you plan to trade the NFP report, make sure to gear-up by reading up on Forex Gump’s Forex Trading Guide for that event.

Shortly after that, at 1:30 pm GMT, we’ll get the reading for Canada’s GDP (0.2% expected, 0.5% previous), and it’s expected to decline, so we can perhaps expect the Loonie to weaken a bit, especially if the actual reading is worse-than-expected.

Then, at 2:45 pm GMT, forex traders will get the U.S. Chicago PMI (53.0 expected, 54.4 previous). Do note that it’s expected to deteriorate a bit, so keep a close eye on the Greenback.

Finally, at 8:00 pm GMT, Federal Reserve Chair Janet Yellen will give the opening remarks at the Federal Reserve’s annual community banking conference. She recently gave a speech on September 24, so we’re not really expecting much, but you never know, right? When it comes out, you can find a copy of her speech here. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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