London Session Recap – February 24, 2014

  • German IFO data better-than-expected: Expectations 108.3 vs. 108.1 forecast; Business Climate 111.3 vs. 110.5 forecast; Current Conditions 114.4 vs. 112.8 forecast
  • European HICP (Final) y/y: +0.8% vs. +0.7% forecast
  • ECB’s Ignazio Visco comments on the potential for negative rate discussion at the next ECB meeting.

The final week of February trading started off a bit slowly in Asia, but FX volatility picked up nicely as soon as the London session opened. For the most part, we’re seeing broad risk-on behavior (probably thanks to positive European data and plans by the G20 to keep up the stimulus); AUD, CAD, and NZD are up against the other majors.  There is an exception to the usual risk-on behavior: the euro is falling against all of the majors.

According to FXStreet.com, the euro weakness is contributed to a statement from ECB Governing council member Visco saying, “the central bank would consider introducing negative deposit rates at the upcoming monetary policy meeting.”

The reaction in the euro is understandably negative. After rallying on this morning’s positive German IFO data, the euro is now negative across the board: EUR/USD is down 13 pips (-0.09%) to 1.3723; EUR/JPY is down 12 pips (-0.08%) to 1.6670; and EUR/GBP is currently down 15 pips (-0.19%) to .8249.

Coming up for the rest of the Monday session, with the exception of one tier 3 U.S. event (Dallas Fed manufacturing index) the calendar is void of any major U.S. or European data events.  This means currency price action will be dictated by risk sentiment from the equity markets in the U.S. and Europe, and that the euro may feel more pressure as forex traders price in the renewed negative rate speculation.

See also:

Asian Session Recap

U.S. Session Recap

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  • John

    Very nice as always. Thank you!