London Session Forex Recap – Oct. 16, 2014

  • European HICP m/m: 0.4% vs. 0.4% forecast, 0.1% previous; y/y inline with 0.3% forecast/previous
  • European Trade Balance (sa): 15.8B EUR vs. 13.3B EUR forecast, 12.7B EUR previous

Once again, it was all about risk aversion forex moves during the morning London session, and without any new direct catalysts, it looks like the focus remains on global growth fears and a continuation of risk-off flows from the U.S. and Asia trading sessions. As usual during a risk-off environment, the comdoll pairs are seeing the biggest movements with flows from the AUD and NZD to the safe havens (U.S. dollar and Japanese yen):

AUD/USD is down 128 pips (-1.46%) to .8699, NZD/USD is down 72 pips (-0.92%) to .7911, and AUD/JPY is down 141 pips (-1.51%) to 92.08

Despite some positive economic data releases in Europe, the euro is down against the non-comdolls currencies, which continues to show that forex traders are focused on the big picture weakness across the region:

EUR/USD is down 81 pips (-0.64%) to 1.2752, EUR/JPY is down 100 pips (-0.73%) to 134.91, and EUR/GBP is down 42 pips (-0.52%) to .7968

Overall, it’s once again a blood bath for traders who are long risk assets across the board in Europe and London, which may continue into the U.S. trading session. For short-term forex traders, the high volatility can present many opportunities!

The forex calendar for the Thursday afternoon London/morning U.S. session is packed today, with good mix of mostly second tier U.S.  and Canadian economic data to help keep the party going.

At 1:30 pm GMT, we’ll get Canadian manufacturing sales (-2% forecast vs. 2.5% previous) and U.S. initial jobless claims data (290K forecast vs. 287K previous).  With global growth concerns back in focus, the Canadian manufacturing data could spark the most volatility during this hour.

At 2:15 pm GMT, it’s all U.S. data from here on out, with industrial production and capacity utilization data for a fresh read on the U.S. manufacturing sector.  Industrial production is forecasted to come in at 0.4% vs. -0.1% previous, while capacity utilization is forecasted to tick higher to 79% vs. 78.8%.  Both data points produce volatile reads monthly, so there is no clear trend on this data.

And at 3:00 pm GMT, we’ll close out the London session with the Philadelphia Fed Survey for another read on manufacturing conditions and the NAHB housing market index number (forecasted to come inline with 59 previous).  The Philly Fed number is likely to be a short-term market mover for the Greenback, which forecasters are expecting to tick lower to 19.8 from 22.5 previous. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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  • Chumpski

    I have a question about the Canadian manufacturing sales impact. I’m seeing that the actual was much lower than the forecasted and yet the CAD seemed to appreciate against USD. I’m seeing more than a 200 pip dip in USD/CAD since 9:30am EDST, it is now 11am EDST. Can you help me understand this move? I expected a rise in USD/CAD.

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