- German import price index m/m: -0.7% v.s. -0.2% expected, -1.5% previous
- German GFK consumer sentiment index: 9.4 as expected v.s. 9.6 previous
- French INSEE consumer confidence: 96 v.s. 97 expected, 97 previous
- Fed rate decision and FOMC statement later
- RBNZ rate decision and statement on the docket
After a rather lively Asian session, volatility simmered down a bit when the morning London session rolled in, as forex traders hunkered down ahead of the FOMC statement. Still, a few currencies were clearly on the move.
The first mover on our lineup is the euro. Most euro pairs were grinding ever higher throughout the forex session, even though the low-tier economic indicators that came out during the trading session were printing mostly negative numbers.
The euro has been showing some weakness for the past couple of weeks, so it’s possible that forex traders were just covering their shorts ahead of the FOMC statement. Although it’s also possible that the euro was getting some genuine demand since there were some positive rhetoric from various ECB officials during the course of the session.
ECB Governing Council Ardo Hansson, for example, stated that he doesn’t “see any convincing reason to consider further policy action in December.” As another example, ECB Governing Council Member Ilmars Rimsevics expressed that “there is no need now to rush into anything (more QE), especially before the end of the year.”
EUR/USD is up by 24 pips (+0.22%) to 1.1065, EUR/JPY is up by 23 pips (+0.18%) to 133.21, EUR/NZD is up by 59 pips (+0.36%) to 1.6465
Moving on, the next mover on our lineup is the Swissy. The safe-haven Swissy was surprisingly strong despite the resurgence of risk appetite, with the FTSEurofirst 300 up by 0.30% to 1,474.20 during the forex session. There weren’t any direct catalysts that could account for the Swissy’s strength, so, like with the euro, it could have been mainly due to forex traders squaring off some of their trades ahead of the FOMC statement.
USD/CHF is down by 36 pips (-0.37%) to 0.9832, GBP/CHF is down by 72 pips (-0.48%) to 1.5037, CHF/JPY is up by 32 pips (+0.27%) to 122.35
The final mover on our lineup is the Loonie. The Loonie was edging higher during the forex session, likely on the back of climbing oil prices, with U.S. crude oil futures up by 0.76% to $43.53 per barrel and Brent crude oil up by 0.79% to $47.18 per barrel during the forex session.
USD/CAD is down by 27 pips (-0.21%) to 1.3233, NZD/CAD is down by 26 pips (-0.29%) to 0.8896, GBP/CAD is down by 70 pips (-0.35%) to 2.0233
If you’ve already read Forex Gump’s write-up on the 3 Central Bank Events You Shouldn’t Miss This Week, then you already know what the highlights for the upcoming afternoon London/morning U.S. session’s forex calendar are gonna be.
All the same, just remember that the U.S. Fed’s rate decision and FOMC statement are due at 7:00 pm GMT while the RBNZ’s rate decision and statement are due at 9:00 pm GMT. Both central banks are expected to keep their respective rates on hold, so forex traders would probably be focusing on their economic outlook and/or sentiment on the future direction of monetary policy.
The two central bank events aren’t the only items on the docket, though. Up first at 1:30 pm GMT, we’ll get to see Uncle Sam’s goods trade balance report (-$64.9B expected, -$67.2B previous). Do note that the U.S. is expected to still print a deficit, but it won’t be as wide as the previous month’s figure.
Under normal circumstances, this would usually draw some Greenback buyers in, but since the FOMC statement is coming up, we probably won’t be seeing a reaction unless the actual reading deviates a lot from consensus.
After that, the level of crude oil inventories (3.7M expected, 8.0M previous) in the United States is scheduled for release at 3:30 pm GMT. This usually affects the Loonie’s price action, though, since Canada is a major supplier of oil to the United States. And do note that it’s expected to contract a bit, which could mean either higher demand for oil or lower output levels. In any case, make sure to keep an eye on both oil prices and the Loonie. Stay frosty!
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