London Session Recap – July 17, 2014

  • No Change to European Inflation Data: HICP y/y inline with 0.5% forecast/previous; HICP Core y/y inline with with 0.8% forecast/previous
  • European HICP m/m ticks up: 0.1% vs. 0.1% forecast, -0.1% previous

European consumer price data was the only economic read for the session, which came inline with expected and previous reads. This event did spark a little bit of life into the euro, but it really wasn’t much to speak of as EUR/USD moved only within a 10 pip range during the release hour, hanging around 1.3530 for the session.

Despite the lack of data for most currencies we did see directional moves, most likely due to fresh, and aggressive sanctions on Russia, sparking broad risk aversion flows.  With the European Union and U.S. selectively targeting Russian energy and bank companies, traders are lightening up on risk-on positions.  Asian and European equities are down and in the FX markets, we’re seeing safe haven flows to the Yen, while forex traders are lightening up on the most bullish currency bets as of late in Sterling:

GBP/JPY is down 68 pips (-0.39%) to 173.50, GBP/USD is down 36 pips (-0.21%) to 1.7098, and USD/JPY is down 16 pips (-0.16%) to 101.48

The forex calendar for the Thursday afternoon U.K./morning U.S. trading session has bit more gong for it this morning with first and second tier events from the U.S.

At 1:30 pm GMT, we’ll get U.S. weekly initial unemployment claims data (310K forecast vs. 304K previous), as well as fresh housing market data in the form of building permits and housing starts.  The housing data is expected to come in above previous reads, so if we get the 310K or above on initial claims, we could see choppy price action for the Greenback.

At 3:00 pm GMT, we’ll the Philadelphia Fed Survey for a read on manufacturing in that region.  Expectations are for a slight dip below the previous read of 17.8 to 16, but remain elevated from the low readings we saw earlier in the year thanks to the unusually cold winter in the U.S.  This is a tier one event, so be on your toes with your U.S. Dollar trades and look out for weak risk sentiment in Asia and Europe to possibly follow through the end of the Thursday session.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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