London Session Recap – June 17, 2014

  • U.K. CPI y/y ticks lower: 1.5% vs. 1.7% forecast, 1.8% previous; m/m  also lower to -0.1% vs. 0.2% forecast, 0.4% previous
  • German ZEW – Economic Sentiment lower: 29.8 vs. 35 forecast, 33.1 previous; Current Conditions better-than-expected: 67.7 vs. 62.1 forecast/previous

Not a lot of forex movement during the morning London session, but we did get some action from Sterling and the Aussie for traders to take advantage of.

First, the Aussie went into sell mode after this morning’s RBA meeting minutes were released, citing rhetoric from policy makers that the recovery remains uncertain and that interest rates will have to stay low. There was a bounce higher in the Australian Dollar at the London open, but it’s looking pretty weak at the moment.  The Aussie is lower against the majors on the session:

AUD/USD is down 42 pips (-0.45%) to .9357, EUR/AUD is up 60 pips (+0.42%) to 1.4494, and the big mover on the session GBP/AUD is up 87 pips (+0.49%) to 1.8148

We also got lower-than-expected inflation data from the U.K. this morning, which sparked volatility as expected but unexpectedly, we saw Sterling bulls fade the sell off reaction quickly.  It looks like forex traders quickly brushed off that weak inflation data, probably to return to the idea that we may get interest rate hikes sooner that previously thought from the BOE, prompting currency traders to buy quickly on the dip.  Sterling is mostly up across the board on the session, with exception against the Greenback:

GBPUSD is breakeven on the session at 1.6981, GBP/JPY is up 28 pips (+0.16%) to 173.16, and GBP/CHF is up 28 pips (+0.18%) to 1.5254

Coming up in the afternoon London and U.S. session, we’ve got a solid line up of potential catalysts from U.S. economic releases and they’re all coming out at 1:30 pm GMT.  We’ll get a read on the housing sector with housing starts and building permits data, as well as another inflation read today in the form of U.S. CPI data.  The headline CPI read is expected to tick lower to 0.2% vs. 0.3% previous, and if the trend we’ve seen recently across the globe continues, then it’s a good chance it’ll continue in the U.S.

Once again, geopolitical issues from the Middle East are still lingering and the story is still fluid.  Keep an eye on that safe haven currencies (like the U.S. Dollar and Japanese Yen) in case risk aversion takes a hold, as well as the oil market and commodity dollars. Stay frosty traders!

See also:

Asia Session Recap

U.S. Session Recap

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