London Session Recap – Sept. 17, 2014

  • U.K. ILO Unemployment Rate ticks lower: 6.2% vs. 6.3% forecast, 6.4% previous
  • U.K. Claimant Count Rate lower as expected to 2.9% vs. 3% previous
  • Bank of England Meeting Minutes released: 7-2 vote to hold rates
  • Swiss ZEW Survey declines to -7.7 vs. 2.5 previous
  • European HICP m/m improves to 0.1% as expected, above -0.7% previous

The big economic news of the morning came from the U.K. as we saw improvements with the Labor market thanks to better-than-expected unemployment data. We also got the Bank of England meeting minutes to add to the volatility, and despite it showing no rush to raise rates by the BOE, it looks like Sterling traders focused on the unemployment data to continue the rally that started in Asia session trading:

GBP/USD is up 48 pips (+0.30%) to 1.6322, GBP/JPY is up 83 pips (+0.48%) to 175.13, and EUR/GBP is down 23 pips (-0.29%) to .7937

The euro found a quick bid on new data showing that inflation ticked up, finding strength mainly against the commodity currencies which aren’t doing too well despite news that the central bank of China injects $81B into major banks to combat slowing growth in the economy.  It looks like forex traders have little faith that this will spark growth, expressing their views by selling the Aussie and Kiwi:

EUR/AUD is up 62 pips (+0.44%) to 1.4308, EUR/NZD is up 63 pips (+0.40%) to 1.5855

The forex calendar for the Wednesday afternoon London/morning U.S. session is loaded with U.S. economic data and monetary policy events that will most likely move the forex markets, especially the Greenback of course.

At 1:30 pm GMT, we’ll get the most recent data on the U.S. current account and consumer price index (CPI).  Both are important inputs to gauge economic health, with the CPI number being the more influential of the two because inflation is closely watched by central banks.  Headline CPI is forecasted to come in around 0.0%, while the core number (ex food and energy) is expected to tick higher at 0.2% vs. 0.1%.

At 3:00 pm GMT, we’ll get the NAHB Builders survey data for a fresh read on the U.S. housing sector, with an index forecast of 56 vs. 55.  This is also a mid-tier event that could provide a small lift in volatility, but probably not long lasting as I’m sure traders will be sitting on the sidelines ahead of the major event today: the FOMC monetary policy decision and press conference at 7:00 pm GMT.

The FOMC decision has been hyped up since last week as forex speculators look for rhetoric that we may see an interest rate hike in the U.S. sooner than previously expected.  There is a high probability that this event will spark a large increase in volatility, but momentum in any direction will all depend on what Janet Yellen has to say at the press conference, scheduled to start at 7:30 pm GMT.  Stay safe traders!

See also:

Asia Session Recap

U.S. Session Recap

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