London Session Recap – January 27, 2014

  • German IFO data mostly better-than-expected: Business climate 110.6 vs. 110.0 forecast, Expectations 108.9 vs. 108.0 forecast.

The price action in the morning London session was light as the economic calendar started off the week with only German IFO data.  The most notable is the Business Climate survey that not only showed a better-than-expected number, but also better-than-previous read  of 109.5.  Improving conditions in Germany is positive for the euro, but the combined currency weakened after the data release, down against the Greenback as low as 45 pips (-0.32%) to 1.3652 and down against sterling 50 pips (-0.60%) to .8240.

Sterling is positive across the board as it looks like traders are jumping in long early; mst are anticipating a positive read from tomorrow’s 1st estimate of the 2013 fourth quarter GDP data. On the session, GBP/USD is up 100 pips (+0.64%) to 1.6581 and GBP/JPY is up 177 pips (+1.07%) to 170.30.  The positive U.K. data throughout 2013 supports this speculative flow and look for sterling to remain relatively strong for the rest of the session.

And we saw the Japanese yen pullback slightly from last week’s strength due to risk aversion flows.  USD/JPY is up 37 pips (+0.37%) on the session to 102.70, but the pullback may be a shallow one as risk sentiment is still negative as seen in Asian equities; the Nikkei was down -386 (2.51%) and the Hang Seng index -473.96 (-2.11%) on the day.

We’ve got U.S. new home sales coming up with expectations of a lower read than previous; this should have a strong influence on the Greenback.  Sentiment should continue to be a strong influence with a light Monday calendar; U.S. equities just open positive and gold is down -0.76% on the day, so the extreme fear from last week may stay receded for now.  Also, volatility may be subdued ahead of this week’s big FOMC meeting, Jan. 29 at 7:00pm GMT, where we may or may not see more Tapering of quantitative easing from the Federal Reserve.

See also:

Asian Session Recap

U.S. Session Recap

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!