London Session Forex Recap – Oct. 29, 2014

  • French INSEE Consumer Confidence weaker-than-expected at 85 vs. 86 forecast, 85 previous
  • U.K. M4 Money Supply m/m: -0.7% vs. 0.3% previous
  • U.K. BoE Net Consumer Credit: 0.9B GBP vs. 0.8B GBP forecast, 1B GBP previous
  • U.K. BoE Mortgage Approvals weaker: 61.3K vs. 62K forecast, 64.1

Consumer data from the Bank of England showed weaker reads than the previous month, with the only bright spot coming from the net consumer credit number coming in above expectations, but still a tick lower than the previous read. Of course, sterling bears must have anticipated weak data as the British pound began its down move ahead of the news, almost right from the London open.  Sterling is down on the session across the board, but not by much because the upcoming FOMC rate decision has most traders hanging on the sidelines:

GBP/USD is down 13 pips (-0.09%) to 1.6116, GBP/JPY is down 46 pips (-0.11%) to 174.23, and EUR/GBP is up 7 pips (+0.10%) to .7899

Risk taking is also up for the session as the global markets continue to price in the potential that we’ll see the Fed set expectations for an extended low interest rate environment and possibly, put a pause on the taper because of recent weak data.  For forex, this tends to mean a rally in the higher-yielding currencies, especially the commodity dollars.  The comdolls have been in rally mode all session, with hardly a sign of slowing down at the moment:

AUD/USD is up 37 pips (+0.41%) to .8888, NZD/USD is up 19 pips (+0.25%) to .7937, and USD/CAD is down 17 pips (-0.15%) to 1.1147

The forex calendar for the Tuesday afternoon London/morning U.S. session is light with only Canadian price index data and the highly anticipated FOMC monetary policy decision and press conference.

At 12:30 pm GMT, we’ll get the raw materials and industrial product price index number from Canada.  With global inflation being such a big concern, we could see these data points provide a nice spike in volatility for the Loonie, especially if they come in way off from expectations or previous reads. The general trend has been lower for both data points all year, so a positive read could give the Loonie a real nice boost.

At 6:00 pm GMT, we’ll get the FOMC monetary policy decision and press conference, which should be a huge mover for all financial markets. Forex Gump wrote in his trading guide for the FOMC event that a few Fed officials have recently spoken about delaying the taper now that weak inflationary pressures are becoming a major concern.  So, there is a bit of uncertainty of what the Fed will do going into this event, which gives it even more potential to be a highly volatile one.  Definitely have a plan ready with all of your open positions and orders, or stay out all together until the dust settles…Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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