London Session Recap – Aug. 20, 2014

  • German PPI dips: m/m at -0.1% vs. 0.0% forecast/previous; y/y to -0.8% vs. -0.7% forecast/previous
  • U.K. CBI Industrial Trends better-than-expected: 11 vs. 4 forecast, 2 previous
  • BOE Monetary Policy Meeting Minutes Released; 2 members voted for a rate hike while 7 voted to hold

Euro bears continued the push lower on the shared currency after seeing another read on German inflation tick lower. With prices, growth and confidence data coming in lower recently, it’s no wonder why we continue to see weak sentiment momentum and it doesn’t look to be slowing with EUR/USD now easily breaking below the 1.3300 handle.

The British Pound is up nicely on the session on a combination of positive economic data and the minutes from the MPC meeting.  The main reason was the meeting minutes which showed that two out of the seven policy members (Martin Weale and Ian McCafferty) voted to hike rates by 25 basis points.  This gave hope to Sterling bulls that the rate hike is still alive, slowing down the downtrend we’ve seen as of late. GBP/JPY is the biggest gainer among Sterling pairs, up 99 pips (+0.58%) to retest the 172.00 handle.

And the final move of note is in the Greenback.  The U.S. Dollar is up strongly during the European session, most likely on speculation that we will see less dovish commentary from the FOMC meeting minutes, to be released later today.  Forex traders are pricing in that the U.S. will be the first of the top major economies to raise rates, making U.S. assets more attractive and spurring the need for foreigners to buy Greenbacks. The Dollar is up across the board with strong support going into the U.S. session:

USD/JPY is up 39 pips (+0.38%) to 103.28, USD/CHF is up 20 pips (+0.22%) to .9111, and NZD/USD is down 22 pips (-0.27%) to .8391

We’ve only got a couple of events coming out for the forex calendar for the afternoon U.K./morning U.S. session, but they do have potential to make some waves in the markets.

At 1:30  pm GMT, we’ll get the monthly read on wholesale sales from Canada, with a forecast to come in at 0.4% vs. 2.2% previous.  The level at which retailers buy from wholesalers can be considered as a leading indicator of consumer spending, and this read has been on an uptrend in 2014, with last month’s 2.2% read as the highest of the year.  If the trend keeps up, we could see more moves from the Loonie this morning.

And after the European close at 7:00 pm GMT the minutes from the latest FOMC meeting will be released.  As previously mentioned, the expectation is that we’ll see less dovish rhetoric on the economy from their meeting, prompting forex traders to speculate that we will see a rate rise.  It’s likely that we won’t see much reaction to this event–unless there is a surprise–seeing how much the Dollar has already rallied this week.

Also, without a surprise from the meeting minutes, currency traders will already be looking ahead to this weekend’s Jackson Hole Summit, where the world’s financial and economic leaders will be discussing issues, the global outlook, and action steps to take.  Be sure to read Forex Gump’s preview on the Jackson Hole event, and with geopolitical tensions rising once again, be sure to stay frosty with today’s trade!

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!