Article Highlights

  • German Ifo Expectations: 103.5 vs. 104.5 forecast, 103.9 previous
  • German Ifo Business Climate: 108.6 vs. 108.4 forecast, 107.9 previous
  • German Ifo Current Conditions: 113.9 vs. 112.4 forecast, 112 previous
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The main focus of the morning London session is likely the euro, rocketing higher early in the session only to fall just as fast going into midday trade.  The possible spark for the early rally may be bullish bets ahead of what was a mostly positive set of German Ifo survey data, and/or optimism going into this weekend’s Eurogroup meeting.  The latter was also the likely cause for the quick turn in sentiment when there was the lack of a Greece deal coming from the meeting in Riga, as well as some not-so-nice comments for Greece from the finance ministers, especially for Greek finance minister Yanis Varoufakis, who is accused of being a “time-waster, a gambler, and an amateur.”

After hovering around 1.0790 going into London trade, EUR/USD nearly shot up as high as 1.0900 before the bears quickly hopped in to push the pair closer to its current levels around 1.0830–price action that can be seen across all of the euro pairs.

We also got fresh perspective from Swiss National Bank President Thomas Jordan, who spoke today at the SNB’s annual general meeting in Bern today. The main takeaway from his speech may be the idea that the SNB will remain active in the forex market as necessary, and that the “Swiss franc is significantly overvalued overall.”

Put it all together and its likely we’ll see the SNB do what it can to drive down the value of its currency, if it hasn’t been active already.  The Swiss franc saw its own share of volatility today, probably best expressed through CHF/JPY which went from 124.90 ahead of the London open, to test as high as 125.55, and then falling to its current levels around 125.10.  USD/CHF was also on its own roller coaster ride, dropping from .9570 near the open to .9510, and bouncing back to go into U.S. trade almost right where it started on the Friday session.

The British pound is getting nothing but love in the morning session as well, and without a direct catalyst, it could be a derivative affect from the EUR/GBP price action and/or possibly on more profit taking from the pressure Sterling has seen in the months leading up to May’s U.K. Parliamentary elections.  Whatever the catalyst may be, Sterling is putting a small hurt across the board on the rest of the majors:

GBP/USD is up 67 pips (+0.45%) to 1.5118, GBP/JPY is up 67 pips (+0.38%) to 180.65, and EUR/GBP is down 19 pips (-0.27%) to .7164

The forex calendar for the Friday afternoon London/morning U.S. session is extremely light on events but what we do have is a potential  market mover for the U.S. dollar.

At 1:30 pm GMT, we’ll get the likely market mover of the session with the U.S. durable goods orders.  This read on purchase orders for big ticket items by manufacturers can be a leading indicator for productivity, so it does tend to have a short-term affect on volatility.

The headline number is forecasted to come in at 0.6% vs. -1.4% previous and the core is forecasted at 0.3% vs. -0.6% previous, both potentially better and would break the recent trend of negative reads and weaker-than-expected surprises.

After the durable goods orders, we may have to look for risk sentiment cues from the equity markets (Nikkei 225 -0.83% to 28.060.98; FTSE100 up +0.31% to 7,075.58, S&P 500 futures up +0.10% to 2,109.10) for further volatility and/or direction for currencies.  Also keep in mind that it is Friday, so it’s possible this week’s big moves may pullback on week end profit taking.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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