London Session Forex Recap – Oct. 28, 2014

  • German Import Price Index m/m: 0.3% vs. -0.1% forecast/previous
  • German Import Price Index y/y: -1.6% vs. -1.9% forecast/previous

The only economic data point we got this morning was a mostly better-than-expected German import price index data.  Another positive read from Europe’s largest economy did provide a lift to the euro ahead of the London open, but the moves were pretty limited without other catalysts for the rest of the morning London session.

But we did get directional movement thanks to a shift in risk sentiment to the positive side, mainly on the idea that we won’t see a rush by the FOMC to raise rates in tomorrow’s monetary policy announcement. An extension of low interest rates generally means money can be borrowed on the cheap and re-invested into higher-yielding/risk assets. That’s why we’re seeing broad strength in higher-yielding currencies (like the comdolls) and equities, and weakness in the safe haven assets this morning:

EUR/JPY is up 48 pips (+0.36%) to 137.39, AUD/JPY is up 70 pips (+0.73%) to 95.60, and CAD/JPY is up 32 pips (+0.34%) to 96.15

The forex calendar for the Tuesday afternoon London/morning U.S. session has a healthy mix of U.S. economic data to hopefully spark a bit more movement than in the morning London session.

At 12:30 pm GMT, we’ll get a read on U.S. durable goods orders for a fresh look on manufacturing activity.  This is one of the more volatile economic reads in that the number can have very wide swings from its previous numbers. Today’s headline and core reads are forecasted to come in at 0.5%, better than the previous reads (-18.4% headline; 0.4% core)

At 1:00 pm GMT, we’ll get a fresh read on the U.S. housing sector with the S&P Case-Shiller Home Price index.  The forecast is for y/y rise by 5.7% vs. the previous read of 6.75%.

And at 2:00 pm GMT, we’ll get the U.S. consumer confidence number, which is could be an important indicator of future consumer spending behavior.  The forecast is for the survey results to tick higher to 87 vs. 86 previous.  This data point is considered to be the big potential market mover of the day, but with the latest FOMC monetary policy decision coming tomorrow, price action may remain a bit muted unless we get big surprises. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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  • Chumpski

    Noob trying to connect the dots here. So, it looks like the u.s. durable goods orders were less than expected, did that have an influence on the upward spike around 0800 EST for eur/usd? And if it did that means that the value of the dollar dipped slightly right? Versus the value of the euro increasing? I’m drowning, help!