London Session Recap – May 8, 2014

  • German Industrial Production m/m: -0.5% vs. 0.2% forecast, 0.6%
  • U.K Halifax House Price Index m/m: -0.2% vs. 0.9% forecast, -1.1% previous
  • Swiss CPI m/m inline with forecast at 0.1%, lower than previous
  • Bank of England’s Monetary Policy Committee makes no changes at today’s meeting; Rates stay at 0.5% and no change to 375B GBP bond purchasing program
  • European Central Bank holds rates at 0.25%; press conference scheduled at 1:30 pm GMT

Forex price action was relatively quiet ahead of today’s central bank meetings, but the Aussie was still on the move on positive Australian employment data.  Most of the Aussie’s gains were during Asia trading, but the Aussie was able to find bid after the London open to make it the big mover and gainer on the session.

AUD/USD is up 59 pips (+0.64%) to .9384, AUD/NZD is up 81 pips (+0.76%) to 1.0842, and AUD/JPY is up 49 pips (+0.52%) to 95.48

The BOE’s Monetary Policy Committee held policy as-is as expected, keeping rates at 0.50% and the monthly quantitative easing program at 375B GBP.  And the European Central Bank holds rates at 0.25%.  There wasn’t much of a price reaction for either event, but the British Pound is taking a small hit on the session:

EUR/GBP is up 22 pips (+0.27%) to .8224, GBP/CHF is down 46 pips (-0.32%) to 1.4803, and GBP/USD is up 14 pips (+0.09%) to 1.6964

The afternoon London session is potentially action packed with a mix of U.S. and Canadian data, as well as central bank speak from the ECB and the Federal Reserve.

At 1:15 pm and 1:30 pm GMT, we’ll get Canadian Housing Starts and Housing Price Index data, respectively.  Also at 1:30 pm GMT, we’ll see the U.S. weekly initial claims number.  These are mid to low tier events, so don’t expected them to spur volatility, especially as Mario Draghi begins to speak on European monetary policy–also at 1:30 pm GMT.  The ECB press conference does tend to spark a volatile reaction, so stay on your toes as the market is still uncertain as to whether we’ll see any rhetoric hinting of future policy moves from Draghi and the gang.

Then at 2:30 pm GMT, Federal Reserve Chair Janet will once again give testimony today, this time to the Senate Budget Committee.  The market doesn’t expect much different rhetoric from yesterday’s testimony where she highlighted labor market weakness despite an improvement in the economic outlook, and that a high degree of monetary accommodation is warranted. Still, she is the head of one of the world’s most powerful central banks, so it’s a good idea to be aware and be safe.

See also:

Asian Session Recap

U.S. Session Recap

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