London Session Recap – Aug. 25, 2014

  • German IFO Current Conditions: 111.1 vs. 112 forecast, 112.9 previous
  • German IFO Business Climate: 106.3 vs. 107 forecast, 108 previous
  • German IFO Expectations: 101.7 vs. 102 forecast, 103.4 previous

Germany provided the main catalyst for forex traders to focus on with weak business sentiment readings.  The Ifo Institute for Economic Research‘s monthly survey showed that business confidence in Germany is at its lowest levels in thirteen months.  This obviously didn’t help the euro, which was already taking a beating to start the week, most likely after we saw dovish comments from Mario Draghi during this weekend’s Jackson Hole Symposium.

EUR/USD is down 43 pips (-0.33%) to break below the 1.3200 handle, EUR/JPY  is down 39 pips (-0.29%) to 137.16, and EUR/GBP is down 29 pips (-0.36%) to .7957

We’re also starting to see a slight pullback in U.S. Dollar strength, sparked by speculation we may see an interest rate hike from the FOMC sooner than expected in 2015.  After hitting highs around 104.25, USD/JPY has pulled back down below the 104.00 handle throughout the morning London session.

We’re also seeing a bit of Sterling strength this morning, with no direct catalyst and GBP/CHF leading the way, up 56 pips (+0.37%) to test the 1.5200.  And the Kiwi is taking a bit of a plunge as recent weak New Zealand data suggests it will no longer outperform its peers. That weakness is lead by AUD/NZD, up 73 pips (+0.67%) to 1.1139, the biggest mover on the session.

The forex calendar for the first afternoon U.K./morning U.S. session is near barren, with only U.S. new home sales data in the lineup.

At 3:00 pm GMT, we’ll get the latest read on the U.S. housing sector from the new home sales data, forecasted to come in at 429K vs. 406K previously.  This number has taken a dip since hitting a high of 504K back in June, so we’ll see if this is a new trend forming back to the downside or just a dip.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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