Daily Forex Fundamentals – November 7, 2013

European Session Wrap-up

  • BOE keeps rates unchanged at 0.50%, asset purchases at 375B GBP
  • ECB surprisingly cuts rates down to 0.25% to boost the economy

The major currencies traded mutely in the early London session as traders waited for today’s central bank decisions. The BOE decided to keep its interest rates unchanged at 0.50% and its asset purchases at 375 billion GBP. GBP/USD briefly touched 1.6056 area but quickly recovered to its intraday support around 1.6070. Since the BOE didn’t release any accompanying statement, market players will wait for next week’s inflation report for clues on the BOE’s hawkishness.

A few minutes earlier the ECB surprised the markets by cutting its interest rates down to 0.25%. Although it kept its deposit rates unchanged, it didn’t stop the bears from dragging EUR/USD below 1.3400, EUR/GBP below .8400, and EUR/AUD to the 132.00 area.

As explosive as the currencies have been, the day’s not over yet! We still have the ECB press conference and U.S. quarterly GDP on tap at 2:30 pm GMT. Both of these reports are potential market movers, so be extra cautious with your trades, aight?

Asian Session Wrap-up

  • AU unemployment rate jumps to 5.7%, additional jobs disappoints
  • Swiss SECO consumer climate at -5 in July to October 2013 (-9 prev)

The Aussie took the most hits during the Asian session since Australia surprisingly printed weak employment numbers. The comdoll has recovered a bit since then after part of the weakness was attributed to a decline in participation rate. The other high-yielding currencies also ended up stealing back pips against its low-yielding counterparts as traders close their positions ahead of today’s major reports.

The big hitters will start coming in at 12:00 pm GMT when the German industrial production is printed. The report is expected to show a 0.2% growth but an upside surprise could support the euro like yesterday’s German factory orders data did.

At 1:00 pm GMT we’ll see the BOE’s monetary policy decision. Analysts aren’t expecting changes to its interest rates but many are looking for the central bank to make changes to its forward guidance schedule after they admitted that the U.K.’s unemployment rate is falling faster than expected.

The ECB’s interest rate decision will follow at 1:45 pm GMT. Market geeks are expecting an interest rate cut in reaction to the euro zone’s falling inflation and tepid growth. Attention will likely be focused on the ECB’s press conference at 2:30 pm GMT though, when the ECB is likely to give details on its plans. It’s also important to note that the U.S. advance quarterly GDP (expected at 2.0%) and the initial jobless claims (expected at 336K) will be released at the same time.

U.S. Session Wrap-up

  • CA building permits rise by 1.7% vs. 7.8% expected
  • CA IVEY PMI at 62.8 in Oct. vs. 51.9 in Sept.
  • U.K. NIESR GDP estimate falls from 0.8% to 0.7% in Oct.
  • Announced U.S. job cuts up by 13.5% from Sept. to Oct. – Challenger

The euro followed the pound’s rally after an ECB source hinted that there won’t be a rate cut from the central bank today. However, traders failed to sustain the momentum from the early London trading as they’re unwilling to commit to strong moves ahead of the major reports today and tomorrow. EUR/USD hit an intraday ceiling at 1.3548, GBP/USD only went as far as 1.6111, and USD/JPY made a run for 98.74.

AUD and NZD were also affected by the overall profit-taking and USD strength. Both AUD/USD and NZD/USD were reluctant to make new intraday highs. Only USD/CAD survived the storm after Canada printed surprisingly positive reports.

Earlier today AUD took a big hit on weak employment numbers. Unemployment rate remained at 5.7% but only 1,100 workers found job in October, which is less than the expected 10,300 increase. Only Japan’s leading indicators data at 6:00 am GMT is scheduled before the London session starts.

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!

  • Bob Connelly

    Just wanted to say I like the knew format it seems to wrap everything up in one story line. It helps me understand the overall market. Plus you point out the main points of the news. Good job! Thanks

    • Pip Diddy

      Glad the new format helps you guys out. Thanks for checking out our blogs!

  • Edgar Campos

    As always, your blog is informative and helpful. I read your blog every night as I prepare my game plan for the next morning of trading. Thank you Pip Diddy!

    • Pip Diddy

      You’re welcome, Edgar! Good luck with your game plans for the rest of the week!

  • Jib

    I am sorry Sir, but I like old format. I think in the new format you present commentaries after data, there is no preview about next data. Ex: BoE Official Ban Rate and US Advance GDP.

    • Pip Diddy

      Thanks for your comment, Jib! Lemme see if I can squeeze in more detailed previews of the major events.

  • no doubt, in this new system of analysis presents the main events, but the old system used to be more detailed, for example I am currently doing a trade involving a couple of JPY and unfortunately does not reach to see any comments or analyzes information about the status of this currency. Every day passing through your blog, really very good school like jejej, grateful for such good care and service.

    • Pip Diddy

      LOL I probably should talk about more currencies. I’m thinking of putting up more detailed updates in the forums. I don’t know how that will fit in the current schedule though. I’ll keep you guys posted for updates. Thanks!

  • Oscar

    I’m sorry too, Pip Diddy. I liked your previous premarket fundamental analysis with details for every major currency. I think it was more informative and helped me a lot to develop bias for the day.
    Just a suggestion – It would be very useful and helpful for us to read your fundamental section both presession (market) and postmarket.

    All the best.

    • Pip Diddy

      Hmm, lemme see if I can do something about this. Thanks for your suggestion, bud.

    • Liquid

      Make that two. I’m a huge fan of the format with the individual currencies. It is my first thing todo in my premarket routine before starting the trading day for the last 12-15 months. Even if I did not open my platform the day before it gives me the insight like I personally watched every important move from the previous day. I learned more about fundamental analysis from reading those updates than anything else! If a trade does not work out or some unexpected move (outside the standard news releases) happens no matter on which currency pair, it’s a sure thing the reason would be found in Pip Diddy’s next post. Sure some would look directly online for an explanation but in the heat of the moment you will find a lot of ‘opinions’ instead of ‘facts’. But after the dust has settled and the moves are digested Pip Diddy explanations are absolutely spot on. Using the individual currency posts optimally is like having a personal fundamental coach giving you feedback every 24h. Thanks for that Pip Diddy. I owe you big time!

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