London Session Recap – February 25, 2014

  • German GDP (final) inline with expectations and previous: 0.4% q/q and 1.4% y/y
  • U.K. CBI Distributive Trades better-than-expected: 37 vs. 15 forecast
  • U.K. BBA Mortgage Approvals up to 49.97K vs. 47.15K forecast
  • Bank of England (BOE) policymaker Ian McCafferty comments that rate hikes in 2015 were “not unreasonable.”

With no major economic events on the forex calendar, currency price action was mostly subdued during the morning London session.  Broad market sentiment leaned towards risk aversion as evident by weak equity markets and a stronger yen: USD/JPY is down 19 pips (-0.19%) to 102.29 and EUR/JPY is down 5 pips (-0.04%) to 140.69.  But there was one exception to the quiet morning amongst the majors: the British pound.

In a reuters interview today, BOE policymaker Ian McCafferty commented on the market’s outlook on U.K interest rates, saying that a raise in the spring of 2015 is “not unreasonable.”  But of course, he added that it will depend on how the economy recovers over the next year, paying close attention to inflation data.

With McCafferty’s comments coupled with the positive U.K. data, it was no surprise that the reaction in the pound was broadly positive, making sterling pairs the big movers of the day among the majors. GBP/USD is up 39 pips (+0.24%) to 1.6692; GBP/JPY is up 7 pips (+0.05%) to 170.76; and GBP/CAD is currently up 74 pips (+0.42%) to 1.8484.

Coming up for the rest of the Tuesday session, we’ve got U.S. housing and consumer confidence data to draw the attention of FX traders.

At 2:00 pm GMT, the S&P Case-Shiller Home Price and FHFA House Price indices will be on tap.  The former looking to come in slightly lower than previous (13.4 forecast vs. 13.71 previous), while the latter looking to come in above previous (0.3% vs. 0.1% forecast).  Then an hour later, we’ve got the consumer confidence number, expected to tick lower at 80.0 forecast vs. 80.7 previous.  This is a tier 1 event, so a big surprise either way could spark big volatility in the short-term.  Be prepared and stay frosty traders!

See also:

Asian Session Recap

U.S. Session Recap

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