Article Highlights

  • German PPI m/m: -0.5% actual v.s. -0.3% expected, 0.0% previous
  • German PPI y/y: -1.7% actual v.s. -1.6% expected, -1.3% previous
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Not much on the docket for today’s morning London forex session, but that didn’t stop forex traders from injecting the trading session with a little volatility and even some directional movement.

Some risk aversion from the earlier Asian session managed to make its way to the European session, with the DAX down by 0.34% to 9,874.50. As a result, some European forex traders decided to flee to the safe-haven Swissy’s sweet embrace, sending it higher for most of the forex session. Although it’s also possible that some longer-term forex traders were loading up on the Swissy due to Swiss National Bank Chairman Thomas Jordan’s optimistic outlook on the Swiss economy for the second half of the year.

Unfortunately (if you’re bullish on the Swissy), the Swissy later found a lot of sellers near the very end of the session. There weren’t any direct catalysts that could account for the sudden weakness, though, so I’m blaming the usual suspect – the SNB and its policy of weakening the Swissy.

USD/CHF is down by 6 pips (-0.07%) to 0.9673 with 0.9642 as session low, EUR/CHF is down by 37 pips (-0.34%) to 1.0907 with 1.0895 as session low, GBP/CHF is down by 32 pips (-0.22%) to 1.5018 with 1.4984 as session low

The poor performance from the DAX, the disappointing readings for Germany’s PPI, and European Central Bank (ECB) Chief Economist Peter Praet’s earlier statement on the ECB’s “readiness and decisiveness” in modifying its stimulus program if necessary were probably weighing-in on the euro since most euro pairs were bleeding out during the forex session.

EUR/USD is down by 47 pips (-0.42%) to 1.1254, EUR/AUD is down by 52 pips (-0.33%) to 1.5700, EUR/NZD is down by 76 pips (-0.43%) to 1.7701

The slight risk aversion probably dampened demand for most of the comdolls, resulting in a mixed performance from most of them. But that was not the case for the Loonie since it got a nice, solid boost from surging oil prices, with Brent crude oil up by 1.90% to $48.37 per barrel during the forex session. The surge in oil prices was apparently due to reports that U.S. oil drillers have been cutting down on their production for the third consecutive week.

USD/CAD is down by 9 pips (-0.07%) to 1.3184, EUR/CAD is down by 81 pips (-0.54%) to 1.4835, AUD/CAD is down by 21 pips (-0.22%) to 0.9445

Yen pairs were active, too. Yep, they were active alright. They were actively and broadly moving to the downside during the forex session despite the slight risk aversion and the yen’s status as a safe haven. Some analysts blamed the yen’s overall softness to speculation that the BOJ may need to ease policy further in the wake of the U.S. Fed’s decision to delay a highly-anticipated rate hike. I guess it sounds reasonable. After all, Forex Gump noted the same thing in one of his write-ups.

USD/JPY is up by 51 pips (+0.43%) to 120.45, CHF/JPY is up by 55 pips (+0.44%) to 124.42, CAD/JPY is up by 46 pips (+0.51%) to 91.36

The forex calendar for the upcoming afternoon London/morning U.S. session is bit on the light side since we only have Canada’s wholesale sales (+0.8% expected, +1.3 previous) and Uncle Sam’s existing home sales (5.50M expected, 5.59M previous) to look forward to at 1:30 pm GMT and 3:00 pm GMT respectively. Still, both indicators are considered as mid-tier item, so they may spark some volatility in the upcoming session.

Aside from those two economic indicators, we also have a central banker bonus round at 6:00 pm GMT, with Federal Reserve Bank of Atlanta President Dennis Lockhart’s speech in Atlanta. We just recently got the FOMC statement, though, so Fed Lockhart wouldn’t probably be adding anything new to the table. But you never know, right? In any case, make sure to keep an ear out for any juicy hints on the future direction of monetary policy and/or deviations from the FOMC statement.

After that, at 7:45 pm GMT, we’ll get yet another central banker speaker in the person of Stephen Poloz, the Bank of Canada’s head honcho. He is going to talk about commodities and the Canadian economy in Calgary at around 8:00 pm GMT. Make sure to keep an ear open for any forward guidance with regard to the Canadian economy’s dependence on oil. Or better yet, get a competitive advantage by reading up on the text of his speech, which is going to be released 15 minutes ahead of the actual speech. When it’s out by around 7:45 pm GMT, you can go take a peek here. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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