Article Highlights

  • German retail sales m/m: -0.2% vs. 0.4% expected, 0.4% previous
  • German retail sales y/y: 1.5% vs. 1.9% expected, 2.4% previous
  • French PPI m/m: -1.2% vs. 0.2% previous
  • French flash HICP m/m: -1.0% as expected vs. 0.2% previous
  • French flash HICP y/y: 0.4% as expected vs. 0.3% previous
  • Swiss KOF leading indicator: 100.3 vs. 96.0 expected, 96.8 previous
  • Spanish flash CPI y/y:
  • Spanish flash GDP q/q: -0.3% vs. 0.1% expected, 0.0% previous
  • Euro Zone flash HICP y/y: 0.4% as expected vs. 0.2% previous
  • Euro Zone flash core HICP y/y: 1.0% vs. 0.9% expected, 0.9% previous
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Forex price action was a bit wonky during today’s morning London forex trading session, probably because of end-of-month flows. The wonkiness was most apparent in the euro’s forex price action.

Major Events:

European equities rally – European equities were in risk-on mode today, with the pan-European FTSEurofirst 300 up by 0.74% to 1,327.96 and the DAX up by 0.50% to 9,686.00 during the forex session.

Even U.S. equity futures were glowing green, with the S&P 500 futures up by 0.77% to 1,895.25 and the Nasdaq futures up by 0.60% to 4,178.75. Most market analysts were pointing to the BOJ’s negative rate move from earlier for the improved risk sentiment.

Oil’s roller coaster ride – Oil was surging earlier on the back of hopes for a potential deal between OPEC and non-OPEC members to cut back on oil output. However, oil began grinding lower during the morning London forex session after Russian Energy Minister Alexander Novak was quoted as saying that a meeting has not yet been agreed upon.

U.S. crude oil was still up by 1.19% to $33.59 per barrel for the day, but was up by 3.33% to $34.13 per barrel just before the session’s open. Meanwhile, Brent crude oil was up by 1.42% to $35.26 per barrel for the day after rising 3.02% to $35.77 per barrel earlier.

End-of-month capital flows – It’s the end of the trading month, so end-of-month capital flows were probably a factor in today’s rather wonky forex price action and directional movement, which I’ll be pointing out below.

Major Currency Movers:

EUR – As noted above, risk appetite was the prevailing risk sentiment during the forex session. In addition, the euro zone got a string of disappointing economic reports during the course of the morning London session.

Nevertheless, the low-yielding euro was giving most of its forex rivals the boot, and was climbing ever higher throughout the session. Since there were no other catalysts for the euro’s strength, and the catalysts that were available should have sapped demand for the euro, the most likely reason for the euro’s forex price action was therefore end-on-month flows.

EUR/USD was up by 26 pips (+0.26%) to 0.9980, EUR/JPY was up by 76 pips (+0.56%) to 132.19, EUR/AUD was up by 93 pips (+0.63%) to 1.5396

CAD – Oil was still in positive territory, but the Loonie was apparently tracking oil’s intraday forex price action since the Loonie pretty much weakened across the board at the same time that oil was pushing away from its highs. Another possible factor, of course, is that forex traders were opening preemptive positions ahead of Canada’s GDP report for later.

USD/CAD was up by 88 pips (+0.63%) to 1.4065, EUR/CAD was up by 119 pips (+0.79%) to 1.5353, AUD/CAD was up by 24 pips (+0.25%) to 0.9979

USD – Given the prevailing risk-on sentiment, the safe-haven Greenback shouldn’t be getting a lot of buyers. But that’s what was exactly happening, even though there were no catalysts directly affecting the Greenback.

Like with the euro, end-of-month capital flows was the likely reason, but it’s also possible that forex traders were expecting a larger slowdown in U.S. GDP growth and unwinding their longs, or some forex traders were loading up on the Greenback because they expect a bigger rise.

AUD/USD was down by 30 pips (-0.42%) to 0.7091, GBP/USD was down by 85 pips (-0.59%) to 1.4288, NZD/USD was down by 21 pips (-0.32%) to 0.6499

Watch Out For:

  • 1:30 pm GMT: Canadian GDP (0.3% expected, 0.0% previous)
  • 1:30 pm GMT: Canadian RMPI (-4.0% expected, -4.0% previous)
  • 1:30 pm GMT: U.S. advance GDP estimate (0.8% expected, 2.0% previous)
  • 1:30 pm GMT: U.S. advanced goods trade balance (-$60.0B expected, -$60.5B previous)
  • 1:30 pm GMT: U.S. core PCE price index (0.8% expected, 1.3% previous)
  • 2:45 pm GMT: Chicago PMI (54.3 expected, 42.9 previous)
  • 3:00 pm GMT: University of Michigan final sentiment index (revision from 93.3 to 93.0 expected)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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