London Session Recap – June 13, 2014

  • German HICP inline with previous reads: m/m at -0.3%; y/y at 0.6%
  • German CPI inline with previous reads: m/m at -0.1%; y/y at 0.9%
  • European Trade Balance (nsa): 15.7B EUR VS. 16.3B EUR forecast, 16.7B EUR previous
  • European Employment inline with previous read at 0.1%

The big moves of the morning London session look to be in risk aversion behavior on fresh catalysts.  This could be the result of a mix of fresh geopolitical news (extremists taking major cities in Iraq) and the surprise announcement yesterday from BOE Governor Mark Carney of possible rate hikes earlier than expected. Both have the potential to have negative effects on the global economy; the former affecting the price of oil and the latter raising the costs of borrowing and doing business.

As usual with risk-off behavior, comdolls turned lower on the session, with capital mainly flowing to the safe havens like U.S Dollar and Swiss Franc, as well as back to the beaten down euro:

EUR/AUD is up 62 pips (+0.40%) to 1.4436, AUD/USD  is down 46 pips (-0.50%) to .9375, and AUD/CHF is down 37 pips (-0.42%) to .8430

Of course, Sterling is up on the session thanks to Carney’s speech yesterday, but it looks like its making most of its moves in Asia as it has seemed to stabilized in the last few hours.  Despite the momentum slow down, the British Pound is seeing some nice gains on the session:

GBP/USD is up 28 pips (+0.17%) to 1.6954, GBP/JPY is up 87 pips (+0.51%) to 173.00, and the big mover of the session is GBP/AUD, up 128 pips (+0.71%) to 1.8078

To close out the Friday London and U.S. session, we’ve got a few U.S. and Canadian data points for currency traders to check out before they check out for the week.

At 1:30 pm GMT, we’ll get Canadian manufacturing sales data (0.5% forecast vs. 0.4% previous) and the main event of the day from the U.S. producer price index data.  The expectation is for both the headline and core number to come in below previous reads.

And a 2:55 pm GMT, we’ll get the preliminary University of Michigan Sentiment sentiment survey, with a forecast of ticking higher from its previous read of 81.9 to 83.0. All U.S. session events are mid-tier, so the potential for volatility spikes is only if we see big surprise reads and it would likely be short-lived.

Finally, broad risk sentiment has been a market driver over the past few trading sessions this week, which may be the case for today as well for equities and currencies going into the weekend. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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