London Session Recap – February 12, 2014

  • Swiss CPI inline with expectations: m/m -0.3% actual vs. -0.3% forecast
  • European Industrial Production much lower m/m: -0.7% vs. -0.3% forecast
  • Bank of England Governor Carney pledges to keep rates low and not take risks with the recovery
  • Euro spikes lowers after official cited for comments of consideration for a negative deposit rate

This morning’s London session volatility started rather slow despite inflation in Switzerland dipping lower than the previous read of -0.2% and European industrial production data coming in much weaker-than-expected.

But the action did pick up a bit, mainly in sterling, after the Bank of England inflation report was released.  Mark Carney re-iterated that rates would stay low, but they did raise their growth forecasts and that the unemployment rate probably already breached their 7% threshold in January.  This sparked a bullish move in sterling after an initial whipsaw reaction; GBP/USD traded as high as 1.6559 within the first hour of the release of the report, but has since pulled back to around 1.6518, up +0.42% for the session.

The big catalyst for the morning wasn’t found on the forex calendar; the euro dropped quite a bit on comments from Benoit Coeure (member of the Executive Board of the European Central Bank) that the ECB is seriously considering negative deposit rates. The euro quickly fell on the report: EUR/USD is down -64 pips (-0.47%) and EUR/JPY is down -112 pips (-0.78%) on the session.  Coupled with this morning’s news from the BOE, EUR/GBP is taking it to the chin, being down -72 pips (-0.87%) to almost test .8200.

For the rest of the Wednesday session, we have a few central bank speeches on the calendar, most notable is ECB President Mario Draghi in Brussels.  This isn’t usually a market mover, but it’ll be interesting to see if he comments on Benoit Coeure’s comments from earlier in the session.  That was a pretty big surprise, which means it could be the driver for euro moves and risk sentiment for the rest of the trading session.

See also:

Asian Session Recap

U.S. Session Recap

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