London Session Forex Recap – August 26, 2016

  • German GFK consumer sentiment: 7.2 vs. steady at 10.0 expected
  • French 2nd Q2 GDP estimate q/q: unchanged at 0.0% as expected
  • French 2nd Q2 GDP estimate y/y: unchanged at 1.4% as expected
  • Euro Zone private loans y/y: 1.8% as expected, same as previous
  • U.K. 2nd Q2 GDP estimate q/q: unchanged at 0.6% as expected
  • U.K. 2nd Q2 GDP estimate y/y: unchanged at 2.2% as expected
  • U.K. preliminary business investment q/q: 0.5% vs. -0.9% expected, -0.6% previous
  • Fed Head Janet Yellen will speak later

All was calm in the forex front during the morning London session, likely because traders were waiting for what Fed Head Yellen has to say later. There were some movements from Swissy and pound pairs, though.

Major Events/Reports:

Skittish risk sentiment – There was a noticeable lack of risk-taking during the morning London session, with most of the major European equity indices slightly dipping into the red.

  • The pan-European FTSEurofirst 300 was down by 0.14% to 1,343.81
  • The blue-chip Euro Stoxx 50 was down by 0.13% to 2,984.00
  • The DAX was down by 0.24% to 10,504.30

Meanwhile, U.S. equity futures were slightly in negative territory but essentially flat:

  • The S&P 500 futures index was down by 0.02% to 2,173.00
  • The Nasdaq futures index was down by 0.06% to 4,779.25

Market analysts naturally attributed the skittish risk sentiment during the session on jitters ahead of Fed Chair Yellen scheduled speech for later.

Tight trading conditions – Volatility and directional movement are usually both in short supply ahead of top-tier events. And that’s apparently what happened in today’s morning London session, as forex traders waited patiently for Fed Head Janet Yellen’s speech at the Jackson Hole Summit for later.

If you have no idea what the Jackson Hole Summit is all about, then you better read up on Forex Gump’s write-up for that here. And if you’re wondering what Yellen’s most recent monetary policy bias is, as well as that of the other voting FOMC members, Forex Gump’s roundup of most recent Fed speeches can help you out. Read it here.

Major Currency Movers:

CHF – Most currency pairs were trading sideways, with some even ending the session flat. Swissy pairs, however, were moving uniformly against the Swissy, which is weird because there was some risk aversion during the session. Perhaps the SNB was sneakily weakening the Swissy again?

USD/CHF was up by 18 pips (+0.19%) to 0.9673, EUR/CHF was up by 15 pips (+0.13%) to 1.0923, CAD/CHF was up by 20 pips (+0.27%) to 0.7505

GBP – The pound’s price action was rather choppy. Still, most pound pairs closed the session on a low note. There were no catalysts that could account for the weakness, since the economic reports that were released during the session were actually positive. It is possible, however, that the pound’s slide was due to profit-taking ahead of Yellen’s speech. After all, the pound did have a good week this week.

GBP/USD was down by 14 pips (-0.11%) to 1.3204, GBP/CAD was down by 29 pips (-0.17%) to 1.7017, GBP/JPY was down by 26 pips (-0.20%) to 132.56

Watch Out For:

  • 12:30 pm GMT: U.S. preliminary Q2 GDP estimate (downward revision from 1.2% to 1.1% expected)
  • 12:30 pm GMT: U.S. goods trade balance (-$62.3B expected, -$63.3B previous)
  • 12:30 pm GMT: 2nd estimate for U.S. core PCE price index (unchanged at 1.7% expected)
  • 2:00 pm GMT: University of Michigan final consumer sentiment (upward revision from 90.4 to 90.8 expected)
  • 2:00 pm GMT: U.S. Fed Chair Janet Yellen will speak at the Jackson Hole Summit
  • 2:30 pm GMT: BOE Deputy Governor Nemat Shafik has a speech

Asian Session Forex Recap

U.S. Session Forex Recap

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