London Session Recap – Aug. 18, 2014

  • European Trade Balance (nsa) weaker: 16.8B EUR vs. 15.1B EUR forecast, 15.4B EUR previous

As usual with Monday morning price action, London session volatility was light but there were a few pockets of interesting price action among currencies.

First, is the British Pound which has yet to close its gap higher, sparked by comments from a weekend interview on Bank of England Governor Mark Carney.  He said he would not wait for real wages to turn positive before lifting Bank rate from its record low of 0.5%, which is slightly contradictory to recent concern on wage growth from last week’s BOE inflation report. The question now is this still an opportunity for forex traders to employ a gap trade on Sterling pairs? We won’t know until after the fact, but for now the British Pound is certainly a market to watch. 

Besides that, forex price action has been pretty choppy, with exception from the Japanese Yen.  With Asia and European equity markets looking to close the day in the green, it looks like broad risk sentiment is on the rise and in the world of forex trading, that typically means a weaker yen and possibly a rise in risk-on currencies.  Since the week is just starting, look out for this sentiment to continue, at least into morning U.S. session and European session close. For now, Yen pairs are up on the day with the momentum still strong against the comdolls at the moment:

USD/JPY is up 22 pips (+0.22%) to 102.53, CAD/JPY is up 36 pips (+0.39%) to 94.22, and AUD/JPY is up 20 pips (+0.20%) to 95.53

The forex calendar for the first afternoon U.K./morning U.S. session is very light with only a couple of mid-tier events to watch out for.

At 1:30 pm GMT, we’ll get the Foreign Securities Purchases data from Canada for a read on investor demand for Canadian assets. This has been a number that’s been on the rise since February, but expectations are we may see a read below the 21.3B previous read.

At 3:00 pm GMT, we’ll get a read on the U.S. housing sector with the NAHB Builders survey.  This survey is given to home builders to get a feel for the state of single family home sales in the U.S. and the current forecast is for the index number to come inline with the previous read of 53 (above 50 indicates expansion, below 50 indicates contraction).  This number only got above 50 for the first time since January with the last read, so it’ll be interesting to see if the trend continues and how Dollar traders react.  Stay Frosty!

See also:

Asia Session Recap

U.S. Session Recap

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