London Session Recap – Aug. 29, 2014

  • German Retail Sales m/m: -1.4% vs. 0.1% forecast, 1.0% previous
  • U.K. Nationwide House Price Index: 0.8% vs. 0.1% forecast/previous
  • Swiss KOF Leading Indicator: 99.5 vs. 97.8 forecast, 97.9 previous
  • European Flash HICP: 0.3% vs. 0.3% forecast, 0.4% previous; Core at 0.9% vs. 0.8% forecast/previous
  • European Unemployment Rate unchanged from 11.5% forecast/previous

Forex volatility continued on into the London session with the euro defying weak data, on top of mixed price action movement in the currencies.

We’ll start with the euro’s surprise rally, despite the weak German retail sales data knocking the currency ahead of the London open.  The shared currency seemed to have bottomed right at the open and after seeing the mixed inflation data; the euro went on the move higher as it looks like forex traders focused on the tick higher on the core read.  The euro is mostly up on the session, mainly against the Japanese Yen and the comdolls:

EUR/JPY is up 41 pips (+0.30%) to 137.10, EUR/NZD is up 34 pips (+0.22%) to 1.5747, and EUR/AUD is up 35 pips (+0.25%) to 1.4121

The Swiss Franc is seeing some rare action this morning after a positive read from the KOF leading indicator to show conditions are improving in the home of world famous cheese and chocolate.  The safe haven currency is up on the session, which is a bit of a big deal as EUR/CHF inches closer to the Swiss National Bank’s floor of 1.2000.  The pair is currently trading around 1.2060, so stay tuned because if the market hits the level that the SNB is ready to defend, we could see fireworks.

And to round it out, we’re seeing continued weakness in the Japanese Yen after posting a cornucopia of weak economic data in Japan (USD/JPY is up 28 pips or +0.27% to retest the 104.00 area), and the Aussie continued to take a broad hit in Europe after printing weakness in private sector credit data (AUD/USD is down 16 pips or -0.18% to .9336).

The forex calendar for the Friday afternoon U.K./morning U.S. session is lined up with a healthy batch of U.S. and Canadian data to keep forex traders on their toes ahead of the weekend.

The set of 1:30 pm GMT releases will be many that include U.S. data (Personal Income and Spending, Core PCE Price Index) and Canadian data (Raw Materials and Industrial Products Price Indexes).  But the big potential mover is probably the Canadian quarterly GDP number, forecast to come in higher at 2.7% vs. 1.2%.  Watch USD/CAD at this time, and with so many data points, be safe because the reaction could be choppy.

And then we’ll close out the calendar for the week with U.S. data: Chicago PMI at 2:45 pm GMT and University of Michigan Sentiment Survey (final) at 2:55 pm GMT.  With the recent trend of positive data from the U.S., it’s no surprise that both are expected to come in above their previous reads, and they are mid-tier events that could spark a bit of volatility for the pair.  So don’t head off to the beach just yet if you’re trying to snag a few pips ahead of the weekend.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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