London Session Recap – January 16, 2014

  • Aussie remains weak after a big miss in employment data
  • European inflation data comes inline with forecasts: German final HICP y/y: +1.2% as forecasted; Europe final HICP y/y at +0.8% as forecasted
  • U.S. CPI data inline with expectations: m/m headline at +0.3%; Initial Claims slightly better-than-expected: 326K vs. 328K

The morning London session remain mostly quiet due to the lack of major economic releases or news.  The Aussie continued to remain weak after that big surprise miss in their December number (-22.6K) and a downward revision of their November number (15.4K vs. the initial 21.0K).  We did see movement from Japan’s currency as yen pairs trended in favor of the yen, probably due to risk aversion behavior in the Japanese equity markets–Japan’s Nikkei index fell -0.39% on the session.  GBP/JPY is down almost 50 pips (-0.29%) since the London open, and the big mover amongst the yen pairs is the AUD/JPY, down almost 120 pips or -1.12%.

We just got inflation and jobs data from the U.S., mostly coming inline with expectations.  The core CPI (ex. Food & Energy) did tick slightly lower from the previous read (+0.1% vs. +0.2%) and the weekly jobless claims came in slightly better-than-expected.  The initial reaction is a broad dollar sell off with EUR/USD jumping 30 pips to 1.3630 on the data, and the USD/JPY down 30 pips to 104.30. Declines in inflation may be taken as an argument to postpone a further reduction of easy monetary policy, which may explain the Greenback’s weakness.

For the rest of the Thursday session, we have major U.S. data on tap at 3:00pm GMT (10:00am ET).  The Philadelphia Fed Survey is expected to post a higher number than the December read (8.7 forecast vs. 6.4 previous), and the NAHB Builders survey is due to come inline with the previous number at 58.

And finally, Ben Bernanke will be giving a speech, reflecting on the past, present and future Fed today at 4:10pm GMT.  This is unlikely to be a catalyst for movement, but something to be aware of.

See also:

Asian Session Recap

U.S. Session Recap

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