London Session Recap – July 15, 2014

  • Swiss Producer & Import Prices inline with forecast/previous at -0.8% y/y
  • U.K. CPI higher-than-expected: y/y at 1.9% vs. 1.6% forecast, 1.5% previous; m/m at 0.2% vs. -0.1% forecast/previous
  • German ZEW Economic Sentiment lower at 27.1 vs. 28.2 forecast, 29.8 previous
  • German ZEW Current Conditions also lower at 61.8 vs. 67.4 forecast, 67.7 previous
  • European ZEW Economic Sentiment much lower at 48.1 vs. 58.4 previous

From the eurozone, the story of the session was the weak ZEW economic survey data.  Because they are the largest economy, the most notable reads are from Germany, which continues the downtrend in sentiment starting from a 61.7 read in January.  It seems like someone knew something as the euro was sold off ahead of the event, but when the numbers were released, forex traders quickly faded the final drop to bring the shared currency to near break even levels on the session.

The other big story is the inflation data from the U.K., which surprised to the upside to the delight of Sterling bulls.  Higher prices tends to spark the argument that the BOE needs to up their rate hike forecasts, which forex traders quickly priced in as soon as the news came out.  The British Pound is currently the big mover and winner for today’s session:

GBP/USD is up 75 pips (+0.44%) to 1.7156, EUR/GBP is down 34 pips (-0.44%) to .7933, and GBP/AUD is up 123 pips (+0.67%) to 1.8305 to make it the biggest gain of the day.

The forex calendar for the Tuesday afternoon U.K./morning U.S. trading session has its fair share of economic data releases to spark further volatility for currency traders.

At 1:30 pm GMT, we’ll get the bulk of the U.S. data including Empire State Survey, Import Price Index, and most notably Retail Sales data.  If the actual reads come inline with expectations, we could see some choppy reactions in the Greenback as the retail sales data is expected to come in above previous reads (core 0.5% vs. 01.% previous), but below previous reads for the Empire State Survey (17 vs. 19.28 previous).

At 3:00 pm GMT, we’ll see the final economic data point of the day in the form of U.S. Business Inventories, with an expectation of coming in inline with the previous 0.6% read.  At the same time, Federal Reserve Chair Janet Yellen will begin her Semiannual Monetary Policy Report to Congress today. Market players expect that the Senate Banking Committee will press the Chairwoman on the need to continue to keep the easy monetary policy at exceptional levels given the recent strength in the employment data and slowly rising inflation.  This event has the potential to spark big moves, so stay frosty in case we get new insights to future monetary policy changes!

See also:

Asia Session Recap

U.S. Session Recap

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