London Session Recap – May 15, 2014

  • Swiss Producer & Import Prices y/y: -1.2% vs. -0.8% forecast, -0.7% previous
  • Speculation of SNB raising the EUR/CHF floor hits the Swissy
  • Preliminary European GDP lower than forecast: y/y 0.9% vs. 1.1 exp.; m/m 0.2% vs. 0.4% exp.
  • European CPI y/y inline with forecast and previous at 0.7%

European currencies were once again on the move thanks to shifting monetary policy speculation.

It was another round of euro selling today after comments from ECB Vice President Vitor Constancio re-iterated that policy markets are prepared to add monetary stimulus if need. We also saw preliminary European GDP come in below expectations, adding fuel to speculation that easing is needed. The euro is down against most of the major currencies on the session but seems to be stabalizing for now:

EUR/USD is down 50 pips (-0.37%) to 1.3662, EUR/JPY is down 44 pips (-0.32%) to 139.25, and EUR/GBP is down 21 pips (-0.26%) to .8155.

The only major currency that the euro isn’t down against is the Swiss Franc, which is taking a broad hit on speculation that the SNB may be forced to raise the EUR/CHF floor if the ECB eases. We also saw weak PPI data from Switzerland to add to the weakness.  The sell off in the Franc seems to have stabilized as well:

EUR/CHF is up 20 pips (+0.17%) to 1.2220, USD/CHF is up 48 pips to .8944, GBP/CHF is up 76 pips (+0.52%) to 1.4986

The afternoon London session/morning U.S. session is stacked with first and second tier events to keep the morning volatility going.

Starting at 1:30 pm GMT, we’ll get manufacturing sales from Canada, and from the U.S. we’ll see the Empire State Survey, Initial Claims, and most notably, CPI data. The headline Consumer Price Index number is expected to come in at 0.3% vs. 0.2% previous, while the core is expected to tick lower to 0.1% vs. 0.2% previous.  Inflation has been ticking lower across the globe, so a read above previous reads could shock forex traders.

In the 2:00 pm GMT hour, we’ll get U.S. Net Long-Term TICS flows, capacity utilization, and industrial production data.  And at 3:00 pm GMT, we’ll get the NAHB builder survey and the other potential major market mover for the Greenback, the Philadelphia Fed Survey. The Philly Fed survey is forecasted to print a weaker-than-previous number of 14.

Finally, Fed Chair Janet Yellen is scheduled to speak with the U.S. Chamber of Commerce at 11:10 pm GMT.  This is not expected to move the markets, but as always, we should be aware of when the Fed Chair is speaking in case of surprise comments.  Stay frosty forex traders!

See also:

Asian Session Recap

U.S. Session Recap

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