- Swiss Retail Sales y/y: -2.8% actual v.s. -2.0% expected, -3.1% previous
- SNB Swissy Sight Deposits: 377.233B v.s. 379.364B previous
- Italian Trade Balance: 4.06B actual v.s. 2.47B expected 3.54B previous
- Canadian Banks on Holiday
While a bit livelier than the Asian session, today’s morning London session was still a snooze fest with most currencies milling about on limited volatility. Most comdoll pairs were practically asleep (with some pairs currently flat on the session), while Greenback and yen pairs were mixed . The only currencies of note are the Swissy, the euro, and the pound.
The Swissy was strong across the board despite a worse-than-expected read on Swiss retail sales, and to add fuel to the flame, the previous reading was downgraded as well! Since there were no other catalysts, the most likely reason for Swissy strength is the decrease in sight deposits (Sight deposits are sometimes used by the Swiss National Bank (SNB) for currency purchases). This naturally caused the rumor mill to start running, churning out rumors of currency manipulation. But since there was a slight decrease, the rumors are discredited for the most part which is good for the currency.
USD/CHF is down by 11 pips (-0.13%) to 0.9170, AUD/CHF is down by 18 pips (-0.25%) to 0.7339, CHF/JPY is up by 23 pips (+0.18%) to 130.45
The euro and the pound were interesting because of their roller coaster action during the course of the session. The euro started the session weak most likely due to the slow progress in Greek talks, but eventually found support when the Italian trade balance posted a better-than-expected reading. The euro then clawed its way back up with some pairs even managing to end the morning London session on a high note.
EUR/USD is down by 10 pips (-0.10%) to 1.1414 from a low of 1.1364, EUR/NZD is up by 29 pips (+0.21%) to 1.5388 from a low of 1.5321, EUR/JPY is up by 7 pips (+0.05%) to 136.63 from a low of 136.02
As for the pound, there weren’t really any direct catalysts during the session, but it showed weakness overall. The most likely reason is its strong ties and correlation with the euro (thanks to the close trade relations between the UK and eurozone) and capital flow. Specifically, capital flow from the pound to the euro since the euro is winning right now, with EUR/GBP up by 10 pips (+0.15%) to 7278.
GBP/USD is down by 23 pips (-0.15%) to 1.5682 from a low of 1.5650, GBP/CHF is down by 18 pips (-0.13%) to 1.4405 from a low of 1.4369, GBP/JPY is down by 20 pips (-0.11%) to 187.67 from a low of 187.28
The forex calendar for the upcoming U.S. session promises yet another exciting session of guess what!?…limited catalysts for potentially low volatility and tight ranges.
First, the U.S. National Association of Home Builders (NAHB) housing market index (57 forecast vs. 56 previous) is up for release at 3:00 pm GMT. This housing sector indicator is a survey of about 900 home builders with regard to home sales, and it acts as a leading indicator for the housing market. A look at the historical data shows this indicator has been in the 50+ range since July, which indicates a positive outlook for the housing market. So unless we see a reading above or below 50, chances are good that the snooze fest will likely continue among forex traders.
And that’s about it! With no further economic data from the U.S., and with Canadian bankers/ currency traders on holiday for Victoria day, we’ll likely see low volatility and liquidity from the majors, making the equity market’s risk sentiment cues the potential catalysts for currency price action for the rest of the Monday session. Stay frosty!
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