London Session Recap – June 24, 2014

  • German IFO Index data disappoints – Expectations: 104.8 vs. 106.0 forecast, 106.2 previous; Business Climate: 109.7 vs. 110.3 forecast, 110.4 previous; Current Conditions: 114.8 vs. 115.0 forecast, 114.8 previous
  • U.K. BBA Mortgage Approvals:    41.8K vs. 41K forecast, 42.17K previous
  • Sterling weaker on BOE Inflation Hearings, dovish rhetoric from Carney

Lots of market movement during the morning London session for forex traders to pick on thanks to German data and a dovish BOE Governor.

First, to add to the weaker-than-expected European PMI data that we saw yesterday, we got weaker German IFO data today to boot.  This widely watched survey data seems to have topped out back in April and is nearing a new trend to the downside with one more weak data release if we see it in July.  But for now, the negative reaction in the euro was quickly faded, with the shared currency up slightly against the majors on the session:

EUR/USD is up 19 pips (+0.14%) to 1.3622, EUR/JPY is up 15 pips (+0.11%) to 138.78, and EUR/GBP is up 28 pips (+0.36%) to .8016

The other big mover from the European region is Sterling, down after dovish comments during the BOE Inflation Hearings.  I believe traders are focusing on BOE Governor Carney’s comments that “wage data has been softer than expected.”  This likely means that the BOE’s view is that there is still more slack in the economy than they’d like, cramping currency trader’s expectations that we will see a rate hike from the BOE sooner rather than later.  The hit Sterling took has calmed down a bit, but it’s still broadly down on the session:

GBP/USD is down 33 pips (-0.20%) to 1.6992, GBP/JPY is down 39 pips (-0.22%) to 173.12, and GBP/CHF is down 38 pips (-0.25%) to 1.8231

For the upcoming afternoon London and U.S. trading session, the economic calendar is packed with U.S. economic data.

At 2:00 pm GMT, we’ll get the S&P Case-Shiller Home Price index and FHFA House Price index for a read on the ever important housing sector.  Both are expected to tick slightly lower, potentially threatening the nice bounce on the Greenback we’re seeing so far today.

At 3:00 pm GMT, we’ll get a read on Consumer Confidence and another housing sector read in the form of the New Home Sales number.  The former is a top tier event, but don’t discount the latter’s potential to provide a short-term kick in volatility either.  Both are expected to come in above their previous reads, which means the Greenback is likely to be on the move into the London session close.

Risk sentiment seems to be mixed once again, so look for the trends sparked by today’s data to continue, barring any big surprises from the U.S.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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