- GFK German Consumer Climate: 10.1 actual v.s. 10.2 expected, 10.2 previous
- U.K. CBI Realized Sales: 29 actual v.s.35 expected v.s. 51 previous
- SNB Chairman Jordan: “Swiss franc is currently significantly overvalued”
Today’s morning London session was rather subdued, with many currency pairs milling about in tight ranges. There were some pairs that showed a lot of volatility, but they ultimately failed to set a clear direction and some even ended the session flat. Also, the rumor mills were busy churning out reports on the Greek drama during the forex session, but the spotlight was not on the euro – it was the Swissy that caught the eye of most forex traders.
The Swissy was already showing signs of weakness at the start of the forex session, but the downward slide only really commenced when Swiss National Bank (SNB) Governing Board Chairman Thomas Jordan issued a speech at the general meeting of the Federation of the Swiss Watch Industry.
In that speech, Chairman Jordan basically reiterated most of the things stated in the SNB’s June 18 monetary policy assessment. The most significant ones are that the “Swiss franc is currently significantly overvalued” and that the SNB is ready and willing “to take an active role in the foreign exchange market.” Such statements naturally sent forex traders on a Swissy selling spree. I also won’t be surprised if the SNB joined in on the selloff.
USD/CHF is up by 45 pips (+0.49%) to 0.9396, GBP/CHF is up by 95 pips (+0.65%) to 1.4775, EUR/CHF is up by 58 pips (+0.55%) to 1.0524
The euro was one of those currencies that showed a lot of volatility but failed to set a clear direction during the forex session. The euro started off weak, thanks to reports that the creditors sent a bailout ultimatum to Greece, followed by reports that the emergency liquidity assistance (ELA) to Greece would not be increased amidst the apparent bank run in Greece.
The euro later found some buyers when reports came out that creditors are willing to present their own proposal. The creditors’ bailout plan was also leaked and it showed that the creditors were willing to make concessions, which was taken positively by the markets. The bond selloff during the later half of the forex session also probably helped, with German 10-year bond yields up by 4.15% to 0.879%.
EUR/USD is up by 12 pips (+0.11%) to 1.1203 with 1.1152 as session low, EUR/JPY is down by 8 pips (-0.06%) to 138.44 with 137.65 as session low, EUR/CAD is down by 5 pips (-0.04%) to 1.3868 with 1.3806 as session low
The forex calendar for the upcoming afternoon London/morning U.S. session is filled to the brim with U.S. data, so Greenback traders better gear up.
Well start the session with a data dump at 1:30 pm GMT, as the readings for U.S. jobless claims (273K expected, 267K previous), U.S. personal income (0.5% expected, 0.4% previous), U.S. personal spending (0.7% expected, 0.0% previous), and U.S. core PCE price index (0.1% expected, 0.1% previous) are released. All the aforementioned indicators are expected to show improvements, so forex traders bearish on the Greenback better watch their back.
Next, at 2:45 pm GMT, forex traders will get Markit’s U.S. flash services PMI (56.5 expected, 56.2 previous). The reading is expected to increase, but it would probably be a non-mover since most forex traders tend to put more emphasis on the ISM PMI reading.
Also at 2:45 pm GMT, is Federal Reserve Governor Jerome Powell’s speech at the Federal Reserve Bank of Kansas City. You know the drill: keep an ear out for any juicy updates or shift in sentiment.
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