London Session Recap – May 9, 2014

  • German Trade Balance: 16.4B EUR vs. 17.4B EUR forecast, 16.2B EUR previous
  • German Current Account: 19.5B EUR vs. 14.9B EUR forecast, 13.8B EUR previous
  • U.K. Manufacturing Production: 0.5% vs. 0.3% forecast, 1.0% previous
  • U.K. Trade Balance (Non-EU): -3.19B GBP vs. -3.0B GBP forecast, -2.87B GBP previous
  • Canadian Employment Data at 1:30 pm GMT

Thanks to Draghi’s comments yesterday that the ECB would be “comfortable” with taking action in their next meeting, forex traders went into sell mode on the euro in the morning London session. He wasn’t specific on what kind of action could be taken, but any kind of easing action to get the economy going tends to be bearish on the currency.  And with German trade data coming in below expectations, it’s no wonder that the euro is down on the session with no signs of slowing just yet:

EUR/USD is down 52 pips (-0.38%) to 1.3785, EUR/JPY is down 55 pips (-0.39%) to 140.09, and EUR/CAD is down 57 pips (-0.38%) to 1.4930

The British pound is also down on the session after manufacturing production comes in better-than-expected, but at half the rate of the previous 1.0% read.  The sell off momentum in the pound is also quite strong, with no signs of slowing either:

GBP/USD is down 66 pips (-0.39%) to 1.6865, GBP/JPY is down 64 pips (-0.37%) to 171.42, and GBP/CAD is down 69 pips (-0.37%) to 1.8266

I mention Loonie pairs because in this afternoon’s London session, we’ll get a potential boost in volatility from the Canadian employment data at 1:30 pm GMT.  It looks like traders are pricing in a positive number than what is expected (13.5K forecast vs. 42.9K previous).  The unemployment rate is expected to remain at 6.9%.

And at 3:00 pm GMT, we’ll get U.S. wholesale inventories to close out the economic data cupboard for the week.  Expectations are for a read inline with the previous number at 0.5% m/m.  This is a tier two event, so don’t expect a big reaction unless we get a big surprise.

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

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

 Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!