- German PPI m/m: -0.1% as expected v.s. 0.0% previous
- German PPI y/y: -1.4% as expected v.s. -1.3% previous
- Spanish Trade Balance: €-1.66B actual v.s. €-2.00B expected, €-2.25B previous
- Euro Zone Current Accounts: €18.0B actual v.s. €24.0B previous
The market was rather subdued during today’s morning London forex session, with most currency pairs imprisoned in tight ranges. The only real mover was the pound and it was noticeably weak. The euro was also on the move, but it failed to establish a clear directional bias.
The euro got a nice boost at the start of the forex session as news spread that Greek banks have reopened and that Greece has began the first round of repayments. The optimism was short-lived, however, as news later came out that capital controls would still be in place. Forex traders were also likely pricing-in the fact that Greece is using the €7B bridge loan to pay off its current debts, which is a very blatant illustration of “robbing Peter to pay Paul” – get the money from the EU, then use it to pay the ECB and the IMF. It also certainly did not help that Germany’s producer price index failed to impress.
EUR/USD is up by 5 pips (+0.05%) to 1.0846 with 1.0863 as session high, EUR/NZD is up by 58 pips (+0.35%) to 1.6495 with 1.6536 as session high, EUR/AUD is up by 30 pips (+0.21%) to 1.4697 with 11.4718 as session high
The pound was weak across the board for the entire forex session. There weren’t really any catalysts that could account for the weakness, though. It’s possible that forex traders were not too happy that the U.K. was dragged into the bailout deal with Greece. The U.K. was able to strike a deal that would limit the bailout’s impact on the U.K., but the fact still remains that the U.K. was dragged along, increasing it’s exposure to Greece.
GBP/USD is up by 62 pips (-0.39%) to 1.5552, GBP/JPY is up by 61 pips (-0.33%) to 193.19, GBP/CHF is up by 68 pips (-0.46%) to 1.4960
The forex calendar for the upcoming afternoon London/morning U.S. session only has the reading for Canada’s wholesale sales (0.0% expected,1.9% previous) lined up for release at 1:30 pm GMT. This acts as a leading indicator for consumer spending as well as business activity, so keep an eye on it. Also note that forex analysts expect it to decline, so watch out because it may cause the Loonie to weaken if the actual reading is within expectations or worse.
We also have a bonus round at 7:30 pm GMT, with U.S. Treasury Secretary Jack Lew’s a speech in Washington. He will talk about the importance of financial reforms, so keep an ear out. Stay frosty!
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