London Session Recap – May 13, 2014

  • German ZEW (Current Conditions Index): 62.1 vs. 60.5 forecast, 59.5 previous
  • German ZEW (Economic Sentiment Index): 33.1 vs. 40.0 forecast, 43.2 previous
  • European ZEW (Economic Sentiment): 55.2 vs. 61.2 previous

We got various ZEW index numbers from Europe this morning coming in mixed, but it was the disappointing German economic sentiment number that was closely watched out for. It looks like investor confidence in Germany declined once again, supporting the broad speculation that the European Central Bank will take easing action at the next meeting in June.

On top of that, it was reported earlier in the Wall Street Journal that the German Bundesbank is open to stimulus, a bit of a surprise as the central bank has been opposed to it in the past.  This was a big blow to euro bulls as sellers jumped in on this news, making the euro the big mover–and loser–on the session:

EUR/USD is down 44 pips (-0.32%) to 1.3712, EUR/JPY is down 22 pips (-0.16%) to 140.25, and EUR/GBP is down 14 pips (-0.18%) to .8140.

The New Zealand Dollar is the other big mover on the session, jumping higher for reasons that are unclear at the moment. Possibly on broad positive risk sentiment and reversal of April weakness:

NZD/USD is up 25 pips (+0.30%) to .8641, NZD/JPY is up 41 pips (+0.52%) to 88.40, and EUR/NZD is the big mover of the day, down 86 pips (-0.54%) to 1.5865.

The afternoon London session/morning U.S. session has a good amount of economic data to add fuel to today’s volatility.

At 1:30 pm GMT, we’ll get U.S. import price data and probably the biggest catalyst for the Greenback today: retail sales data. Retail sales data is expected to come in below the previous reads and if it does, it’ll be a blow to recent positive sentiment on the U.S. and maybe a negative for the Greenback.

At 3:00 pm GMT, we’ll get the business inventory numbers, expected to come inline with the previous read at 0.4%. And late in the U.S. session, starting at 10 pm GMT, we’ll see a couple of reports from New Zealand (RBNZ Financial Stability Report and retail sales), as well as a news conference with RBNZ Governor Wheeler.  These events have low expectations for volatility, but definitely ones to be aware of, as with any central bank speak.  Stay frosty!

See also:

Asian Session Recap

U.S. Session Recap

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