London Session Recap – Sept. 18, 2014

  • Swiss Trade Balance lower at 1.39B CHF vs. 3.9B CHF
  • Swiss National Bank holds rates at 0.0% – 0.25% rang
  • U.K. Retail Sales m/m as expected at 0.4%, above 0.0% previous; Core Retail Sales lower at 0.2% vs. 0.3% forecast, 0.4% previous
  • U.K. CBI Industrial Trends weaker-than-expected: -4% vs. 9% forecast, 11% previous
  • ECB begins targeted Long-Term Refinancing Operations (LTRO) today, issues lower-than-expected amount of loans

First, the Swiss National Bank held its 3-month libor target range at 0.0% – 0.25%, but cautioned the markets that it may step up its defense of the franc “immediately” if needed to combat any rise in deflationary conditions.  The Swiss franc rallied on the event, pushing EUR/CHF even closer to the 1.2000 level that the SNB will fiercely defend.  But the pair seems to have found support around the 1.2065 level and bounced higher to current levels around 1.2090.

The other big news of the morning session is the start of Long-Term Refinancing Operations (LTRO) by the ECB, but the results appear to be disappointing as only 82.6B EUR was issued, much lower than the expected range of 100B – 300B EUR from a Bloomberg survey.  Volatility picked up in the euro with an initial spike higher on the news and quickly faded.  But for the most part, the reaction has been relatively quiet so far, but it’s something to watch for the session.

Finally, we got a mix of positive and negative economic data from the U.K., and it looks like currency traders are focusing more on the improvement in the headline retail sales number as sterling is moving higher on the session.  Of course, everyone is anticipating the results of the Scottish independence vote going on at the moment, so the move higher may slow down to a grind for now.  Overall, the British pound is up on the session against most of the majors:

GBP/USD is up 64 pips (+0.41%) to 1.6335, GBP/JPY is up 141 pips (+0.80%) to 177.82, and EUR/GBP is down 21 pips (-0.26%) to .7875

The forex calendar for the Thursday afternoon London/morning U.S. session is filled with mostly mid-tier U.S. economic events to hopefully keep the party going.

At 1:30 pm GMT, we’ll get the latest reads on the U.S. housing sector through the housing starts and building permits data (both expected to come in below forecasts at 1.04M), as well as the weekly U.S. initial jobless claims number (305K forecast vs. 315K previous).  Again, these are mid-tier events, so don’t expect a long lasting bump in volatility without a big surprise relative to the forecasted or previous reads.

Then at 3:00 pm GMT, we’ll get the Philadelphia Fed Survey for a read on business health in Pennsylvania, New Jersey and Delaware. This economic data point does have potential to spark volatility, and it will be interesting to see if the latest number breaks the uptrend in data by coming in around the forecast of 23 vs. 28 previous.

Again, the forex world is anticipating the results of the Scottish independence vote.  The polls will close at the end of the U.S. session, so we won’t get the official tally until Friday, but look out for early indications of which way the vote may lean to spark increased volatility in Sterling pairs.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together. In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.  Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!