London Session Recap – Aug. 19, 2014

  • U.K. inflation data much weaker-than-expected
  • U.K. CPI m/m: -0.3% vs. -0.2% forecast, 0.2% previous; y/y at 1.6% vs. 1.8% forecast, 1.9% previous
  • U.K. Input Prices m/m: -1.6% vs. -1.0% forecast, -0.9% previous

The main story for the Tuesday morning London session was the much weaker reads on inflation in the U.K., which gives the Bank of England more reasons to hold off on raising interest rates. Of course, this had the Sterling traders hitting the sell buttons once again, pushing British Pound pairs to break previous week lows on strong momentum that doesn’t look to slow at the moment:

GBP/USD is down 93 pips (-0.56%) to 1.6631, GBP/JPY is down 75 pips (-0.44%) to 170.79, and GBP/AUD is down 127 pips (-0.71%) to 1.7811–the biggest mover of the session

Outside of U.K., another story of note is the Swiss National Bank to hold their cap on EUR/CHF until 2016, due to struggles in the euro area.  This has become something to watch as EUR/CHF has picked up momentum to the downside, recently breaking 1.2100 to get very, very close to that 1.2000 floor.

Also, we continue to see a recovery in the Kiwi Dollar, after taking a big hit during Asia session after New Zealand saw their own inflation data coming in much weaker-than-expected. NZD/USD is down on 17 pips (-0.20%) to .8460, after hitting lows around .8425 earlier in the Tuesday session.

The forex calendar for the afternoon U.K./morning U.S. session is filled with market moving data from the U.S. to help keep up the volatility for forex traders.

At 1:30  pm GMT, we’ll see more reads from the housing sector (Building Permits & Housing Starts) and inflation data.  The inflation reads will most likely be the ones to watch with expectations for the headline CPI read to come in at 0.1%, below the 0.3% previous read; the core read is expected to come in at 0.2%, a tick higher above the 0.1% previous read.  If the U.K. and New Zealand’s inflation reads are any indication of what kind of numbers we may see, Dollar traders may be in for a ride.

No data reads expected after 1:30 pm GMT, so price action may be influenced by broad risk sentiment, which seems to be in favor of risk taking with the lack of geopolitical tension headlines in recent days.  Look out for movement in the Japanese Yen and Swiss Franc to move along with sentiment flows.  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!