- No economic data during the London forex session
- Greece submits new proposal
- Euro Zone officials upbeat on the new proposal
- ELA available to Greece raised
- U.S. new home sales coming up
The forex calendar may have been empty during the morning London forex session, but that didn’t stop currencies from making the moves, with the spotlight on the euro thanks to the Greek drama.
The euro took a plunge when the morning London session opened, most likely due to the European market pricing-in the lack of progress on Greece over the weekend and fears that Greece will impose capital controls in order to stop the apparent bank run. The plunge was short-lived, though, because reports came out that Greece has offered a new proposal to its creditors, and euro zone officials were pretty optimistic about it too.
The ECB also raised the limit on the emergency liquidity assistance (ELA) available to Greece from last Friday’s €85.9 ceiling, although there were no specifics on the exact amount.
All the same, the apparent optimism led to increased appetite and a global equity rally. The DAX, in particular, was up by 307.90 points (+2.79%) to 11,348.00. A round of intense bond-selling also commenced, with German 10-year bond yields up by 11.32% to 0.846%. The optimism on Greece, the bond rout and the European equity market rally allowed the euro to finally claw its way back up.
EUR/USD is down by 47 pips (-0.41%) to 1.1344 from a low of 1.1310, EUR/JPY is down by 9 pips (-0.07%) to 139.83 from a low of 139.25, EUR/NZD is up by 33 pips (+0.21%) to 1.6491 from a low of 1.6407
Looking at the other currencies, the Loonie was pretty strong across the board, with USD/CAD down by 17 pips (-0.14%) to 1.2230. There were no direct catalyst for the Loonie’s strength, but Brent crude oil was up by 0.82% to 63.54 during the session. Perhaps the rise in oil prices gave the Loonie some buyers. After all, Canada is a major oil producer.
Another currency worth noting is the pound since it was broadly weak. There were no major catalysts during the forex session, but it’s possible that counter currency action was the primary driver for the pound’s weakness. Specifically, forex traders were buying up the euro and the Greenback while simultaneously dumping the pound, since EUR/GBP is up by 10 pips (+0.15%) to 0.7172 while GBP/USD is down by 87 pips (-0.55%) to 1.5813.
As already mentioned, the Greenback found some buyers during the forex session, thanks to the rise in risk-appetite that pushed U.S. equity futures into the green, with S&P 500 futures up by 0.81% to 2,114.65 and Nasdaq futures up by 0.83% to 4,537.40. Aside from risk appetite and capital flow, there weren’t really any direct catalysts for the Greenback’s strength during the forex session. Pre-emptive positioning was not a valid reason either since the forex calendar for the upcoming session is practically empty.
USD/JPY is up by 48 pips (+0.39%) to 123.29, USD/CHF is up by 48 pips (+0.52%) to 0.9220, AUD/USD is down by 30 pips (-0.39%) to 0.7757
Speaking of the upcoming afternoon London/morning U.S. session’s forex calendar, we only have the euro zone’s flash consumer sentiment (-5.8 expected, -5.5 previous) and U.S. existing home sales (5.28M expected, 5.04M previous) lined up, and both indicators are scheduled for release at 3:00 pm GMT.
The euro zone’s flash consumer sentiment is rarely a market-mover, but U.S. existing home sales usually is since the housing sector usually involves other business sectors, such as construction, and it also helps in gauging consumer spending and sentiment. And do note that U.S. existing home sales is expected to improve, so watch out for any surprises.
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