London Session Recap – January 8, 2014

  •  German Trade Balance: 18.1B EUR vs. 18.9B EUR forecast; Current Account: 21.6B EUR vs. 19.3B EUR forecast
  • U.K. Halifax House Price Index m/m: -0.6% vs. 0.9% forecast
  • European Retail Trade m/m: 1.4% vs. 0.1%; German Factory Orders (sa): 2.1% vs. 1.5% forecast
  • U.S. ADP Employment Survey: 238K vs. 200K forecast

We saw much more movement in today’s price action with the U.S. dollar and British pound seeing strength against the euro, Swiss franc, and Canadian dollar.

Despite the mostly positive data from Germany in this morning’s London session, we saw weakness in the euro, probably due to traders starting to price in the divergence in growth outlook and monetary policies of Europe against the U.S. and the U.K.  The U.S. recently decreased its asset purchasing program on a trend of improving data, while the U.K.’s growth outlook continues to look positive, making both countries more attractive than Europe for investments.  Both EUR/USD and EUR/GBP tested previous week lows in the morning session (1.3592 and .8271 respectively).

The Canadian dollar continues to attract sellers thanks to fresh negative data during the Tuesday trading session, while the Swiss franc finds weakness, probably thanks to SNB‘s Jordan comments that the EUR/CHF floor is still the right tool to ensure monetary conditions for the “foreseeable future.” USD/CAD has broken above the 1.0800, and USD/CHF now making 2014 highs as it tests .9100.

Early in the U.S. session, we got a positive read on the ADP Non-Farm payroll report: 238K vs. 200K forecast.  There was a brief bullish move for the Greenback, an expected limited reaction thanks to the upcoming FOMC meeting minutes at 7:00pm GMT (2:00pm ET).  Look out for hints of what the Fed is watching as a sign to reduce their asset purchasing program further from the $10B reduction announced in December.

See also:

Asian Session Recap

U.S. Session Recap

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