London Session Recap – Sept. 8, 2014

  • Swiss Unemployment Inline with forecast/previous at 3.2%
  • German Trade Balance Improves: 23.4B EUR vs. 17B EUR forecast, 16.6B EUR previous
  • U.K. Halifax HPI m/m inline with 0.1% forecast, but below 1.2% previous
  • Swiss CPI m/m higher: 0.0% vs. -0.1% forecast, -0.4% previous
  • Swiss Retail Sales y/y weaker: -0.6% vs. 3.3% previous
  • European Sentix Indicator drops: -9.8 vs. 1.4 forecast, 2.7 previous

Forex volatility continued to be up throughout the morning London session thanks to a slew of economic data and geopolitical news from the U.K.

The main catalyst continues to be how the British Pound is reacting to polls that favor Scotland leaving the U.K. After gapping down at the Asia open, Sterling is getting hit hard once again during European trade, but seems to have found a bottom for now.

GBP/USD is down 183 pips (-1.13%) to 1.6139, GBP/JPY is down 158 pips (-0.92%) to 169.91, and EUR/GBP is up 94 pips (+1.19%) to .8020

The euro is also on the move by bouncing back from last week’s ECB rate cut and this morning’s Asia session losses.  We saw mixed data from Europe, so it may be that forex traders are focusing on the big surprise in German export data.  Weak European Sentix data did weigh on the rally on the release, but that was temporary as euro bulls seem to be in control at the moment, mainly against the pound and comdolls:

EUR/USD is 2 pips below breakeven at 1.2947, EUR/AUD is up 66 pips (+0.48%) to 1.3872, and EUR/NZD is up 43 pips (+0.28%) to 1.5587

Finally, the Aussie is on the move to the downside during London trade, most likely on the disappointing Chinese imports number this morning (-2.4% vs 3% forecast, 1.6% previous).  Australia is a big trading partner with China, so a reduction of imports is a negative for the Land Down Under and pushing Aussie lower across the board:

AUD/USD is down 37 pips (-0.41%) to .9333, AUD/JPY is down 23 pips (-0.24%) to 98.23, and AUD/CHF is down 30 pips (-0.34%) to .8695

The  forex calendar for the first U.S. session of the week is pretty light with only a couple of economic events to keep the volatility train going.

Just now at 1:30 pm GMT, we got Canadian Building Permits data coming in at 11.8% vs. -5.00% forecast, but below 16.4% previous.  The initial reaction was a spike in favor of the Loonie, but it’s still very fresh so keep an eye out for movement in Canadian Dollar pairs.

Then at 3:00 pm GMT, we’ll get monthly U.S. consumer credit data with an expectation of ticking lower to $17B vs. $17.26B previous.  This mid-tier data point is a good read on consumer spending, so it’s a good idea to pay attention to this one to get a gauge of direction for the Greenback for the rest of the U.S. session.

Finally, broad risk sentiment is to the downside as global equity markets are mostly closing in the red (FTSE 100 down -0.97%, Hong Kong Hang Seng Index down -0.20%), so pay attention to how the safe haven currencies are moving against risk currencies like the comdolls. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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