Article Highlights

  • Italian Trade Data: €1.85B actual v.s. €4.23B expected, €8.07B previous
  • Euro Zone Final CPI y/y: no revision at -0.1% as expected
  • Euro Zone Final Core CPI y/y: no revision at 0.9% as expected
  • Euro Zone Trade Balance: €19.8B actual v.s. €22.1B expected, €22.4B previous
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The market was rather subdued during today’s morning London forex session, with most currency pairs contently milling about in relatively tight ranges. The only real movers during the session were the Kiwi and the euro, and they were both noticeably weak.

After a rather strong week, the Kiwi finally got its wings clipped. Figuratively speaking, of course, since a currency doesn’t have wings and the Kiwi bird after which the currency is named after is a flightless bird to begin with. Anyhow, the Kiwi’s weakness could have been due to European forex traders pricing-in the down-tick in New Zealand’s CPI reading (0.3% actual v.s. 0.4% previous). Although it also quite possible that many forex traders were just taking some delicious profits off the table in order to avoid weekend risk – it’s a Friday after all.

NZD/USD is down by 44 pips (-0.65%) to 0.6791, NZD/JPY is down by 56 pips (-0.70%) to 80.84, NZD/CHF is down by 48 pips (-0.75%) to 0.6460

Meanwhile, the euro continued this week’s theme by sinking even lower. The euro ended the Asian session on a strong note, but it then began showing some signs of weakness at the start of the London forex session. However, it wasn’t until the figure for Italy’s trade balance failed to deliver that the decline started in earnest. The final reading for the euro zone’s headline CPI also failed to show any revision, cementing the dip into negative territory and further discouraging forex traders from buying up the euro. It also probably didn’t help that the figure for the entire euro zone’s trade balance came in much, much lower, which could mean a slowdown in GDP growth.

EUR/USD is down by 41 pips (-0.36%) to 1.1342, EUR/CHF is down by 43 pips (-0.40%) to 1.0796, EUR/JPY is down by 56 pips (-0.42%) to 135.01

As for other currencies of note, we have the U.S. dollar. Most Greenback pairs were moving higher during the forex session. Many analysts attributed the Greenback’s strength to renewed optimism that a rate hike within the year could still be in the realm of possibility given yesterday’s better-than-expected readings for U.S. CPI. It’s also possible that some forex traders were opening preemptive positions ahead of U.S. data for later, though.

USD/CAD is up by 39 pips (+0.30%) to 1.2910, GBP/USD is down by 33 pips (-0.22%) to 1.5441, AUD/USD is down by 27 pips (-0.38%) to 0.7265

The forex calendar for the upcoming afternoon London/morning U.S. session has a good mix of items from all tiers for us, so I’ll just be pointing out the most important ones.

We’ll start the forex trading session with the Loonie in focus since the readings for Canada’s manufacturing sales (-1.0% expected, 1.7% previous) and Canadian foreign securities purchases ($2.21B expected, -$10.12B previous) will be released first at 1:30 pm GMT. Do note that the former is expected to deteriorate while the latter is expected to show an improvement, so we may see some interesting price action from the Loonie.

Next, at 2:15 pm GMT, forex traders will be shifting their focus to the Greenback since the readings for U.S. capacity utilization rate (77.3% expected, 77.6% previous) and U.S. industrial production (-0.2% expected, -0.4% previous) are scheduled to come out. U.S. capacity utilization rate is expected to decline for the third consecutive month, which could mean increasing slack and further slowdown in industrial production down the road. But on a more slightly upbeat note, the contraction in industrial production is expected to lighten up a bit.

Then, at 3:00 pm GMT, we’ll be getting the preliminary readings for the University of Michigan’s consumer surveys for the month of October, with readings for consumer expectations (79.0 expected, 78.2 previous), consumer sentiment (89.0 expected, 87.2 previous), and current conditions (101.5 expected, 101.2 previous) on tap. Forex traders usually have their sights on the reading for consumer sentiment and it’s expected to increase a bit, so we may see some Greenback strength if the actual reading comes in as expected or better. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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