London Session Recap – Aug. 15, 2014

  • European Bank Holidays for Assumption Day
  • U.K. GDP (2nd Est.) q/q inline with 1st Est. at 0.8%; y/y ticks up to 3.2% vs. 1st Est. of 3.1%
  • U.K. Index of Services inline with forecast/previous read at 1%

The morning London session was light on news and economic data with most European banks on holiday, but we did see pockets of forex volatility and directional moves in the Yen and Pound.

No direct catalysts for the Japanese Yen this morning, but it looks like the only directional play among the major currencies, most likely due to a shift away from safe haven currencies.  With less geopolitical risk headlines this week, forex traders seem to be more comfortable looking for higher-yield and risker bets.  On low volatility, the Yen is mostly down across the board with momentum apparently still in sellers favor at the moment:

USD/JPY is up 12 pips (+0.12%) to 102.55, EUR/JPY is up 44 pips (+0.32%) to 137.33, and CHF/JPY is up 39 pips (+0.35%) to 113.36

And being the only markets open in the region, the British Pound saw a pickup in volatility, but mostly choppy movement ahead of and in reaction to the second read of their GDP number.  The only change was to the year-over-year number, which ticked higher to 3.2% vs. 3.1% forecast/previous. Even with that slightly positive news that we are still seeing growth, Sterling remains mostly flat on the session.

The forex calendar for the final afternoon U.K. morning/U.S. session is heavier with tier one events to surely kick off forex volatility.

At 1:30 pm GMT, we’ll get a heavy dose of Canadian data, first with Manufacturing Sales (0.4% forecast vs. 1.6% previous), and then a revisit of July’s employment number. This is an odd situation as the 200 net change will be restated due to a “processing error.” There really isn’t much precedent for a situation like this, so it may make sense to be cautious with Loonie trades during this time.

At the same time, we’ll get U.S. data as well with a read on Producer Prices (forecasted to dip lower on the headline number to 0.1% vs. 0.4% previous) and the Empire State Survey for a read on manufacturing conditions (also forecasted to dip to 20 vs. 25.6).

Through out the 2:00 pm GMT hour, we’ll get a steady stream of U.S. data, starting with Net Long-term TICS flows, then capacity utilization and industrial production at 2:15 pm GMT, and finishing with the Univ. of Michigan Sentiment survey index (preliminary read) at 2:55 pm GMT.

The latter of the bunch is the potential market mover of the hour, with a forecast of 82.5 vs. 81.8 previous.  It should be a busy day for the Greenback, especially with going on low liquidity from the European holiday. Stay Frosty!

See also:

Asia Session Recap

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together. In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.  Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!