London Session Recap – March 14, 2014

  • German Inflation data (Final) inline with expectations: HICP m/m at 0.5%; CPI m/m at 0.5%
  • Swiss Producer and Import Prices weaker: m/m -0.4% vs. -0.1% forecast
  • U.K. Trade Balance weaker-than-expected: -3.99B GBP vs. -2.6B GBP forecast
  • European Employment change q/q: 0.1% vs. 0.0% forecast
  • U.S. PPI m/m  lower-than-expected:  headline m/m -0.1% vs. 0.2% forecast/previous

Yesterday’s risk aversion moves sparked by a mix of geopolitical issues in Ukraine and economic issues in China continued today.  Also, the BOJ minutes showed that expanding the stimulus program may not be necessary as the BOJ feels the consumption tax hike in April will not hinder economic growth.  The Japanese yen continues to be a beneficiary of global fears as forex traders take down the riskier bets, forcing them to buy back funding assets like the yen.  USD/JPY is down 58 pips (-0.57%) to 101.21, GBP/JPY is down 115 pips (-0.69%) to 168.06, and EUR/JPY is down 68 pips (-0.48%) to 140.55.

Sterling is also a big mover on the session after the weak trade balance numbers, raising more concern that the economic strength argument for the pound is almost near its end.  GBP/USD is down 70 pips (+0.79%) to .9056, EUR/GBP is up 62 pips (+0.67%) to 92.95, and GBP/CHF is down 42 pips (+0.40%) to 1.0578.

We just got the U.S. producer price index numbers at 12:30 pm GMT.  Both the headline and the core number (-0.2% vs. -0.1% forecast) came in lower, giving the Fed more leeway to tighten monetary policy. The immediate reaction was positive for the Greenback across the board, but it looks like it’s being quickly faded.

And finally, we’ve got the Preliminary University of Michigan Sentiment numbers out at 1:55 pm GMT with expectations for a slight tick above the previous read: 82.0 vs. 81.6 previous.  This is a tier 2 event, so the reaction may be limited if the actual number isn’t a big surprise from expectations.

See also:

Asian Session Recap

U.S. Session Recap

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