London Session Recap – Aug. 14, 2014

  • German GDP (Prelim) q/q weaker: -0.2% vs. -0.1% forecast, 0.7%
  • French GDP (Prelim) q/q weaker-than-expected: 0.0% vs. 0.1% forecast, 0.0% previous
  • European GDP (1st. est.) q/q: 0.0% vs. 0.1% forecast, 0.2% previous
  • European HICP y/y remains inline with forecast/previous at 0.4%

Europe was at center stage today thanks to fresh reads on quarterly GDP numbers–and they weren’t good. Broadly, the euro area saw no growth in the second quarter and their biggest economy, Germany, came in weaker than both expectations and previous reads at -0.2%.  We also saw no rise in inflation, and when coupled with slow or no growth, these are red flags that major problems could be brewing for the region. The reaction was actually bullish for the euro, most likely due to forex traders closing short positions on the news after the broad selling ahead of the event this entire week.  The euro is mixed against the majors on the session:

EUR/USD is up 12 pips (+0.09%) to 1.3375, EUR/JPY is up 16 pips (+0.11%) to 137.00, and EUR/NZD is down 50 pips (-0.32%) to 1.5736 to be the big mover among euro pairs on the session.

The Kiwi maintains its strength throughout the morning London session, sparked by better-than-expected quarterly retail sales numbers released during Asia, making it the big winner among the majors so far today:

NZD/USD is up 42 pips (+0.50%) to .8496, NZD/JPY is up 44 pips (+0.52%) to 87.03, and NZD/CHF is up 32 pips (+0.42%) to .7700

The forex calendar for the afternoon U.K. morning/U.S. session is light once again with no major events in the lineup.

All coming in at 1:30 pm GMT, we’ll get the House Price Index from Canada, as well as the Import Price Index and Initial Jobless Claims data from the U.S. The initial claims numbers is probably the one with the most potential to move the markets, although because it’s rated a mid-tier event, the reaction will most likely be muted and short-lived without a big surprise.

So, we’ll have to look towards broad risk sentiment for directional cues, which may come from the equity and bond markets based on what’s going on with U.S. earnings and geopolitical news events.  Stay Frosty!

See also:

Asia Session Recap

U.S. Session Recap

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