London Session Recap – January 21, 2014

  • German ZEW Economic Sentiment weaker-than-expected: 61.7 vs. 64 forecast
  • Overall European ZEW Economic Sentiment on the rise: 73.3 vs. 68.3 previous
  • Canadian wholesale sales:  0.0% vs. 0.3% forecast; manufacturing sales: 1.0% vs. 0.3% forecast.

Investor confidence in Germany took a slight step back from 7-year highs, but the European sentiment picture looks up.  According to Bloomberg, unemployment at record levels, as well as a decline in bank lending is a concern, but overall, the GDP outlook is favorable for Germany.  The euro didn’t immediately react to this news, but it has declined against the U.S. dollar as low as 25 pips to Friday’s lows around 1.3516.  Against the British pound, the pair is also testing the previous week’s lows around .8230.

We just received fresh data from Canada in the form of Wholesale and Manufacturing sales, coming in mixed relative to forecasts.  The market seems to view this as favorable for the Loonie which hit 1.1000 in this session–a level not seen since 2009. Since the release, the Loonie is up about 20 pips against the Greenback (USD/CAD trading around 1.0985), and up against the euro by 20 pips with EUR/CAD trading around 1.4865.

One last price action to note is the Kiwi dollar.  It still remains strong after the positive CPI read early in the Asia session, but has pulled back a bit.  After hitting .8340 against the U.S. dollar, NZD/USD has stepped back to retest .8300 where it looks like it has found support.  Look for Kiwi support through the rest of the light data session.

No further economic data points are expected for the rest of the Tuesday trading session, but we do have the International Monetary Fund (IMF) releasing a revision to its World Economic Outlook later today.  Not expected to be a market mover, but any significant surprises to their revision will be weighed on by the markets.  Also, the U.S. markets will be back from holiday, so we may see an increase in broad market volatility as they catch up with the rest of the world and sentiment influence from the U.S. equity and bond markets.

See also:

Asian Session Recap

U.S. Session Recap

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