London Session Forex Recap – Oct. 6, 2015

  • German Factory Orders m/m: -1.8% actual v.s. 0.5% expected, -2.2% previous
  • U.K. Halifax House Price Index: -0.9% actual v.s. 0.1% expected, 2.7% previous
  • Swiss CPI y/y: -1.4% actual v.s. -1.5% expected, -1.4% previous
  • Euro Zone Retail PMI: 51.9 actual v.s. 51.4 previous
  • U.K. Housing Equity Withdrawal: -£10.9B actual v.s. -£12.5B expected, -£12.1B previous
  • U.S. and Canadian trade data coming up

Today was a pleasantly peaceful morning London forex session since most currency pairs decided to just kick back and chillax inside relatively tight ranges. The only clear violators of the peace were the euro and pound.

The pound started the forex session strong and remained strong for the duration of the trading session despite a disappointing reading for the Halifax house price index, which could mean a potential slowdown in the housing market. It’s possible that forex traders weren’t fazed by the actual reading since they were looking at the longer-term given that Halifax released a report yesterday which stated that “68% of Britons [are] now expecting the average property prices to be higher in 12 months’ time and just 5% expecting it to be lower.”

It’s also possible that the pound was getting some support due to speculation regarding the recent developments in the SABMiller story. To be more specific, SABMiller, which is a British brewing giant that Anheuser-Busch InBev is trying to acquire, reported that it saw an increase in quarterly sales during the forex session. This could mean that Anheuser-Busch InBev is gonna need more than the earlier assessment of around £68 billion to launch a takeover bid, and it’s possible that forex traders were pricing that in.

GBP/USD is up by 22 pips (+0.15%) to 1.5166, GBP/JPY is up by 33 pips (+0.18%) to 182.49, GBP/CAD is up by 48 pips (+0.25%) to 1.9870

Like the pound, the euro started the trading session on strong footing before climbing even higher despite the dismal reading for Germany’s factory orders, which was being blamed for the earlier selloff in European equities. There weren’t any catalysts that could explain the earlier show of strength, but the euro’s later price action is easier to justify since the euro zone posted an improvement for its retail PMI and European equities were able to make a recovery, with the DAX currently up by 0.23% to 9,838.50 after a 0.7% slide earlier.

EUR/USD is up by 40 pips (+0.36%) to 1.1226, EUR/JPY is up by 49 pips (+0.37%) to 135.04, EUR/NZD is up by 76 pips (+0.44%) to 1.7300

As for other currencies worth noting, we have the Kiwi. Most Kiwi were grinding lower during the forex session. There weren’t any major reports related to New Zealand, though, so perhaps European forex traders were just pricing-in the very disappointing reading for NZIER’s business confidence index earlier (-14 actual v.s. 5 previous). It’s also possible that European forex traders were pricing-in Fonterra’s disappointment with the TPP deal, although New Zealand was ultimately able to secure limited access to the American and Japanese dairy markets.

NZD/USD is down by 8 pips (-0.13%) to 0.6485, NZD/CAD is down by 7 pips (-0.08%) to 0.8492, NZD/CHF is down by 14 pips (-0.23%) to 0.6319

The forex calendar for the upcoming afternoon London/morning U.S. session has a lot of heavy-hitters lined up, so get your game face on.

Well start with a double whammy at 1:30 pm GMT since the trade data for Canada (-$1.2B expected, -$0.59B previous) and the U.S. (-$48.0B expected, -$41.9B) would be released simultaneously. Do note that the readings for both economies are expected to show some deterioration, so be careful, especially if you have positions or open orders on USD/CAD.

After that, at 3:00 pm GMT, forex traders will get the reading for Canada’s Ivey PMI (54 expected, 58 previous) and Uncle Sam’s IBD consumer optimism index (44.5 expected, 42.0 previous). The IBD consumer optimism index isn’t usually a market mover, but the Ivey PMI usually is. And do note that general consensus among market analysts is that the Ivey PMI will lose a few points, so expect the Loonie to weaken a bit if the actual reading is within expectations or worse.

We also have a central banker bonus round later when ECB President Mario Draghi speaks in Frankfurt at around 6:00 pm GMT. Make sure to keep an ear out for any updates on economic outlook and the possible direction of monetary policy in the euro zone given that the euro zone’s headline CPI recently took a dive to the downside and also given that Draghi is open to introducing more easing measures if needed. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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