London Session Forex Recap – Oct. 30, 2015

  • French consumer spending 0.0% vs. 0.3% expected, 0.1% previous
  • German retail sales m/m: 0.0% vs. 0.4% expected, -0.7% previous
  • German retail sales y/y: 3.4% vs. 4.1% expected, 2.1% previous
  • Swiss KOF economic barometer: 99.8 vs. 100.1 expected, 100.3 previous
  • Euro Zone flash CPI y/y: 0.0% as expected vs. -0.1% previous
  • Euro Zone flash core CPI y/y: 1.0% vs. 0.9% expected, 0.9% previous
  • Euro Zone jobless rate: 10.8% vs. 11.0% expected, 10.9% previous
  • Canada’s GDP reading coming up

Despite reports that global stocks were on course for the best month in four years, today’s morning London forex session was actually another risk-off session, with the FTSEurofirst 300 down by 0.28% to 1,480.08.

As a result of the risk aversion, the safe-haven currencies (Japanese yen,Swiss franc, U.S. dollar) were able to give the higher-yielding currencies, particularly the comdolls, a good bashing.

It’s also possible that European forex traders were pricing-in the various events and reports from the earlier session, though. The Japanese yen, for instance, was probably getting some demand since the BOJ held off on further easing during their monetary policy statement. The Kiwi, meanwhile, was really putting up a fight against the safe-havens, probably because ANZ’s business confidence index dramatically jumped from -18.9 to 10.5, and even forecasted “reasonable growth for the year ahead.”

AUD/USD is down by 15 pips (-0.22%) to 0.7103, AUD/JPY is down by 57 pips (-0.66%) to 85.53, AUD/CHF is down by 25 pips (-0.36%) to 0.7016

NZD/USD is down by 3 pips (-0.05%) to 0.6747, NZD/JPY is down by 19 pips (-0.24%) to 81.30, NZD/CHF is down by 11 pips (-0.16%) to 0.6667

USD/CAD is up by 14 pips (+0.11%) to 1.3157, CAD/JPY is down by 27 pips (-0.31%) to 91.56, CAD/CHF is down by 11 pips (-0.15%) to 0.7513

Interestingly enough, the Greenback turned out to be the weakest among the safe-haven currencies, with USD/JPY down by 29 pips (-0.24%) to 120.41 and USD/CHF down by 13 pips (-0.13%) to 0.9876.

There weren’t any direct catalysts that could explain the dampened demand for the Greenback during the session, but continued disappointment with the slowdown in Q3 2015 U.S. GDP growth could have been a factor. It could have also been due to short-term dollar bulls unwinding their positions to avoid weekend risk. Although end-of-the-month positioning/re-positioning by forex traders could have been a reason as well.

As for the low-yield euro, it was enjoying the risk aversion as well despite headline euro zone CPI coming in at zero percent and a couple of disappointing data points from france and Germany.

EUR/USD is up by 25 pips (+0.23%) to 1.1016, EUR/AUD is up by 57 pips (+0.37%) to 1.5495, EUR/NZD is up by 29 pips (+0.18%) to 1.6306

Whoo-wee! The forex calendar for the upcoming afternoon London/morning U.S. session has got a data dump in store for us, and they’re mostly mid-tier items to boot.

We’ll get roughly half of the forex session’s data points at 1:30 pm GMT, with the simultaneous release of Canada’s GDP report (0.1% expected, 0.3% previous) and the readings for Uncle Sam’s employment cost index (0.6% expected, 0.2% previous), core PCE price index (0.2% expected, 0.1% previous), personal spending (0.2% expected, 0.4% previous), and personal income (0.2% expected, 0.3% previous).

Canada’s GDP reading is expected to decline a bit, so keep an eye on the Loonie since a worse-than-expected reading may attract some sellers. And be extra careful with USD/CAD since the various U.S. consumer spending indicators have mixed expectations.

Next at 2:45 pm GMT, forex traders will get a look at the Chicago PMI (49.4 expected, 48.7 previous). It’s expected to climb a bit higher, so expect some Greenback demand, especially if it prints a better-than-expected reading.

After that, at 3:00 pm GMT, forex traders will get the final readings for the various consumer surveys from the University of Michigan: consumer sentiment (92.5 expected, 92.1 previous), consumer expectations (83.1 expected, 82.7 previous), and current conditions (107.0 expected, 106.7 previous). Forex traders usually focus on consumer sentiment, and do note that it’s expected to be revised a bit higher, which may possibly convince U.S. dollar bulls to jump in.

Also at 3:00 pm GMT, we’ll get a central banker speaker in the person of FOMC Member John Williams. He has a speech titled “Measuring the Natural Rate of Interest” in Washington DC. You can grab the text of his speech here when it comes out. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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