London Session Recap – May 23, 2014

  • German GDP (Final) inline with initial reads: y/y at 2.3%; q/q at 0.8%
  • German IFO data weaker than expected and previous: Business Climate read down to 110.4 vs. 110.9 forecast, 111.2 previous

Euro bears got one last selling point to push the shared currency lower thanks to weak German IFO data.  It was weak all around as the Current Conditions and Expectations numbers also came in below both expectations and previous reads on the forex calendar.  The reaction wasn’t a huge sell off, but it also looks like euro bulls aren’t trying to step in at these lower levels either:

EUR/USD is down 29 pips (-0.21%) to 1.3625, EUR/CAD is down  21 pips (-0.15%) to 1.4846, and EUR/JPY was down (-0.25%) to 138.60 before recovering to current levels around 138.85

As much attention as the euro has gotten after the weak IFO data, the big mover of the session is the Swiss Franc.  Without a direct catalyst, today’s selloff could be off of lingering speculation that the SNB will act to protect or even raise the EUR/CHF floor if the ECB cuts interest rates in June.  The Franc was the biggest loser on the session, but has since recovered from being down as much as 0.34% against the Dollar where it tested the .8970 level on USD/CHF.

The last afternoon London/morning U.S. session of the week is light on data, but what we’re getting can certainly pack a final punch of volatility before forex traders clock out for the weekend.

At 1:30 pm GMT, we’ll get another top tier economic data point from Canada in the form of the Consumer Price Index data.   With the exception of the April release that came inline with forecast, the core number has been steadily trending higher since dropping to -0.4% in January. It’s not a huge market moving event, but it’s definitely an event to watch out for and see if Loonie traders try to grab some quicks ahead of the weekend.

At 3:00 pm GMT, we’ll get the new home sales number from the U.S. The expectation is that we’ll see a read of 425K vs. 384K in the previous month.  This number has been surprising to the downside for most of 2014, plus we saw a weaker-than-expected (but better-than-previous) number from existing home sales number yesterday, so the probability is for another potentially weak data point from the housing market.  But as always, be ready for anything and the data coming out either way, especially as traders square up positions ahead of the weekend.  Stay frosty!

See also:

Asian Session Recap

U.S. Session Recap

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