London Session Recap – March 4, 2014

  • U.K. Construction PMI weaker-than-expected: 62.6
  • European Producer Price Index data comes in lower-than-expected: y/y -1.4% vs. -1.3 forecast; m/m -0.3% vs. -0.1% forecast
  • Risk aversion subsides on news that Russia is ending military exercises

Risk taking is back on!  Forex traders are back to pressing the buy buttons on risk after news reports suggesting that the Ukraine-Russia tensions may be ratcheting down.  Bloomberg reports that Russian President Vladimir Putin said there is no need to send troops to into Ukraine and ending military exercises along the border, giving traders the nod that the situation will not escalate soon.

The usual safe havens, Japanese yen and Swiss franc, saw a decline in demand during the morning London session on the news. USD/JPY is up 43 pips (+0.43%) to 101.87, EUR/JPY is up 93 pips (+0.67%) to 140.17, and EUR/CHF is currently up 45 pips (+0.38%) to 1.2170.  And it’s obvious by the price action in the euro pairs that the weak PPI data was brushed off for the positive turn in the Ukraine story.

We also got a weaker-than-expected construction PMI report from the U.K., barely holding Sterling back from rising as high as other “risk” currencies against the safe havens: GBP/JPY is up 102 pips (+0.61%) to 170.04, and GBP/CHF is currently up 46 pips (+0.32%) to 1.4762.

Coming up for the rest of the Tuesday trading session, the forex calendar is bare until 3:00 pm GMT with the U.S. IBD consumer optimism report.  This isn’t usually a closely watched data point, but since it’s the only one we’ve got, it is good to be aware in case we see a far outside surprise from the forecast of 45.6 vs. 44.9 previous.

So for today, geopolitical news will be the driver for currencies and global markets for the rest of the European and U.S. session.  But be on your toes because the situation in Ukraine is still fluid, and like the forex markets, anything can happen.  Stay frosty traders!

See also:

Asian Session Recap

U.S. Session Recap

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