London Session Recap – March 7, 2014

  • German Wholesale Price Index lower than previous read: -1.7% vs. -1.3% previous
  • Swiss Inflation data ticks lower:  HICP y/y -0.2% vs. 0.3% forecast; CPI y/y -0.1% vs. 0.1% previous
  • German Industrial Production m/m inline with forecast at 0.8%; better than previous read of 0.1%
  • Coming up: U.S. Non-Farm Payrolls net change forecast at +149K, unemployment rate forecast: 6.6%.
  • Coming up: Canadian net jobs change forecasted at +15K; unemployment rate at 7.0%

Volatility was light for the currency markets in the London session, with a few currencies building upon yesterday’s strength.

First is the euro that found a new bid at the open of the trading in Europe, trekking higher on yesterday’s comments from ECB President Draghi downplaying inflation fears.  This of course, lessons the pressure on the ECB to cut rates, boosting the euro higher, even in today’s morning London session.  EUR/USD is up 27 pips (+0.22%) to 1.3895, EUR/JPY is up slightly by 11 pips (+0.11%) to 143.05, and EUR/GBP is up 16 pips (+0.22%) to .8290.

The other major currency seeing some action is the Australian dollar, which continues its run off the positive Trade Balance and Retail Sales data from yesterday’s session. The Aussie is up across the board, even against the strong euro: EUR/AUD is down 10 pips (-0.06%) to 1.528, AUD/JPY is up 31 pips (+0.32%) to 93.89, and AUD/USD is up 34 pips (+0.38%) to .9122.

As usual with this time of the month, we’ve got a slew of major economic news from North America, most notably: employment data.

At 1:30 pm GMT, U.S. Non-Farm Payrolls report is once again the highly anticipated event as traders are anxious to see what the U.S. will post with the extreme weather conditions.  Revisions to the previous reads will also be closely watched, and the question is, “because this is the third month of extreme weather, will this data be strongly reacted to?” Are traders tired of hearing, “it’s because of the weather” as an excuse to not pay too close attention to this data.  We’ll just have to wait and see.

At the same time as U.S. jobs numbers is the release of the Canadian jobs report. While not as big a market mover the NFP report is, this data point can easily spark above average volatility in the Loonie, especially in the cross pairs like GBP/CAD, EUR/CAD and AUD/CAD.  In January we saw a positive  surprise for Canada, adding 29K jobs vs. the 20K forecast–will the strength continue?

Besides employment numbers, we’ll also get Trade Balance numbers from the two neighbouring countries, which could add more volatility than usual for this hour.  These are big, big event folks, so be sure to stay on your toes and stay safe!

See also:

Asian Session Recap

U.S. Session Recap

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