London Session Recap – March 6, 2014

  • Frech ILO Unemployment Rate (Final): 10.2% vs. 11.0% forecast
  • U.K. Halifax House Price Index m/m up big:  2.4% vs. 0.7% forecast
  • German Factory Orders m/m better-than-expected: 1.2% vs. 0.9% forecast
  • BOE Monetary Policy Committee keeps rates steady at 0.5%, asset purchases at 375B GBP per month
  • European Central Bank (ECB) holds rates at 0.25%

It’s once again that big day for London session forex traders: the monetary policy decisions from both the Bank of England and the European Central Bank!

Ahead of the two major events (and when coupled with the positive economic data from Australia early in the Asia session), positive European and U.K. data sparked a bit of risk taking in the morning London session.  The Greenback and Japanese yen took hits across the board, most notably against Aussie, Kiwi, and euro.

The ECB and MPC, both of whom held their interest rate policies as-is (0.25% and 0.50% respectively).  The MPC kept their asset purchasing program at 375B GBP per month, with no additional comments from the MPC at this time.  Sterling price action remained relatively stable after the event with Cable dipping to 1.6695 before finding support and pulling higher to around 1.6712.

It was pretty much the same story with the euro as the ECB held their rates steady.  After whipsawing up and down a 50 pip range, the pair is back to where it was trading ahead of the event, around 1.3750.  This really isn’t unexpected as the major market mover for the euro on this day is usually the accompanying statement from Mario Draghi.   It’ll be interesting to hear what Draghi has to say after the recent string of positive data from the Eurozone has hit the markets recently.

Coming up in the afternoon London session, we’ve got Canadian and U.S. data on tap, as well as the previously mentioned press conference on today’s ECB monetary policy decision.

At 1:30 PM GMT, the U.S. has a few pieces of employment data (most notable is the initial claims number 336K vs. 348K prev) to hit the wires, while Canada will be releasing its building permits number (1.7% vs. -4.1% prev).  This tends to not be a catalyst for volatility as Draghi’s press conference usually takes the spotlight from all other forex news.

At 3:00 pm GMT, we’ll get Canada’s Ivey PMI data which expected to come in below the previous read (53.1 vs. 56.8 prev.) but still in positive territory. U.S. factory orders will come out at the same, and better-than-previous as well (-0.5% vs. -1.5% prev.), which means USD/CAD, EUR/CAD, and EUR/USD might be the pairs to watch to close out the Thursday session in Europe.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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