London Session Recap – June 19, 2014

  • Swiss National Bank holds off of monetary policy changes.  EUR/CHF floor remains at 1.2000
  • U.K. Retail Sales y/y lower: headline 3.9% vs. 4.3% forecast & 6.5% previous; core 4.7% vs 4.8% forecast & 7.4% previous
  • U.K. CBI Industrial Trends: 11% vs. 2% forecast

The action wasn’t huge but it is across the board, with the big moves were sparked mainly by the Swiss National Bank’s monetary policy statement.

As expected, the SNB left short term rates below 0.25%, but the real story to watch was whether or not we’d see the floor on EUR/CHF moved higher to prevent the Swiss Franc from strengthening any further.  The floor stayed put at 1.2000 and naturally, the Franc rallied–and remains up on the session–as the sell off through May and June on speculation that the floor would move was quickly unwound to spark a strong rally.

USD/CHF is down 29 pips (-0.32%) to .8926, EUR/CHF is down 9 pips (-0.08%) to 1.2166, and the mover among the majors is NZD/CHF, down 30 pips (-0.37%) to .7793

And despite weaker-than-expected U.K. retail sales data, the British Pound is up against the majors, possibly on a mix of early rate hike speculation and broad risk-on sentiment:

GBP/USD is up 41 pips (+0.25%) to 1.7032, GBP/JPY is up 29 pips (+0.17%) to 173.41, and GBP/NZD is up 67 pips (+0.35%) to 1.9512

For the rest of the London and U.S. trading session, we’ve got U.S. economic data in the line up to hopefully kick off one more round of volatility before the end of the Thursday session.

At 1:30 pm GMT, we’ll get the U.S. weekly initial claims number, which is expected to come in at 313K new unemployment claims vs. 317K previous. And at 3:00 pm GMT, we’ll get two data points in the form of the Conference Board Leading Indicator number and probably the big event of the morning, the Philadelphia Fed manufacturing index number.  The Philly Fed number is a leading indicator of economic health in the Philadelphia Federal Reserve district, determined by a survey of general business conditions. The forecast is for 14 vs. 15.4 previous.

And finally, broad risk sentiment is up, most likely a reaction to the dovish tone by Fed President Janet Yellen during the FOMC meeting yesterday.  There was speculation that the Committee may consider removing easy money policies much quicker than previously thought, but what forex traders got instead was rhetoric of little concern for an over heating economy, igniting a selloff in the Greenback and rally in risk.  We may continue to see broad risk-on sentiment, so watch out for further moves higher for Sterling and the comdolls.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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