London Session Recap – Aug. 22, 2014

  • No economic data releases

Despite a lack of economic data and currency news, forex traders still had a bit of volatility and direction to play with in this morning’s London session.

There was a broad push lower in the euro, and without any direct catalysts, it may be due to traders getting ready for ECB President Mario Draghi’s speech at the Jackson Hole summit today.  Labor market dynamics is the theme of the symposium, so he may make comments on that, as well as the recent weakening European data. Whatever the reason may be that has forex traders hitting the sell button, the euro has moderate momentum to the downside since the London open:

EUR/USD is down 21 pips (-0.16%) to 1.3258, EUR/JPY is down 26 pips (-0.19%) to 137.60, and EUR/AUD is the big mover among euro pairs, down 32 pips (-0.23%) to 1.4241

The Japanese Yen briefly found buying strength on the session, most likely on broad risk sentiment shifting to the downside as European equities fell to the red today.  Many Yen pairs falling around -0.30%, but it looks like sellers hopped back in quickly to fade the move, again with no apparent direct catalyst.  Besides these two moves, price action was surprisingly active given the lack of news and data, but choppy for most currency pairs.

The forex calendar for the afternoon U.K./morning U.S. session is stacked with major Canadian data to give volatility a boost, and we have an import central bank speeches throughout the day from the Jackson Hole Symposium.

At 1:30 pm GMT, we’ll get a burst of volatility for the Canadian Dollar as we see major economic data points in the form of consumer price index and retail sales. Inflation is probably the more influential data point of the two, especially since Canada has been pretty resilient in this category relative to their peers.  But the headline CPI read is forecasted to come in lower at -0.1% vs. 0.1% previous, which if it does, may be the first negative read since January. The core number is expected to tick higher to 0.1% vs. -0.1% previous, so expect a bit of choppiness if we do see mixed numbers.

Retail sales is forecasted to come in mixed as well with the core to expected to come above previous (0.3% vs. 0.1% prev.) but the headline expected to come in lower (0.3% vs. 0.7%).  This number has mostly stayed positive all year, so we’ll see if this release stays in line or could be a sign of a change in trend.

And finally, we’ve got speeches from the Jackson Hole Symposium today, most notably from Fed Chair Janet Yellen (3:00 pm GMT) and as previously mentioned, ECB President Mario Draghi (7:30 pm GMT).  We don’t usually see huge reactions off of this yearly event, but as always, when the heads of central banks speak, we’ve gotta listen and be ready for surprises. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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