London Session Forex Recap – Nov. 12, 2014

  • U.K. Claimant Count Change: -20.4K vs. -20K forecast, -18.4K previous
  • U.K. ILO Unemployment Rate: 6.0% vs. 5.9% forecast, 6.0% previous
  • European Industrial Production: 0.6% vs. 0.7% forecast, -1.4% previous
  • BOE Inflation Report Released; growth and inflation forecasts adjusted lower

Big moves from forex traders on Sterling this morning thanks to reads on U.K. unemployment, and a change to the BOE’s outlook to growth and inflation.

The unemployment data actually wasn’t too bad; even though they came below forecast/previous reads they were pretty close to those numbers.  The British pound actually managed to make some gains after the unemployment data was released, and we saw GBP/USD hit the highs for the day around 1.5939.

The big mover came from the Bank of England’s Inflation Report, and it didn’t look good for Sterling bulls.  The BOE cited downside risks to global growth and stagnation in Europe as a couple reasons for shifting their outlook on U.K. inflation and growth lower.  This pushes back the idea that the BOE may raise interest rates in the U.K. from early 2015 to late 2015. Forex traders hit the sell button on the British pound after the news, and it looks like the momentum isn’t slowing down as we head into the U.S. trading session:

GBP/USD is down 96 pips (-0.61%) to 1.5816, GBP/JPY is down 193 pips (-1.05%) to 182.32, and the biggest mover of the day goes to GBP/NZD, down 153 pips (-1.21%) to 2.0128

Other moves of note are in the euro taking a broad hit against the comdolls starting from the Asia session, possibly supported by positive Westpac consumer sentiment numbers, no change to the New Zealand 2015 milk payment forecast, and a slightly weaker-than-expected industrial production number from Europe:

EUR/AUD is down 45 pips (-0.31%) to 1.4312, EUR/NZD is down 106 pips (-0.66%) to 1.5856, and EUR/CAD is down 37 pips (-0.27%) to 1.4100

And finally, we’re all on EUR/CHF watch as it hovers above 1.2000, the level at which the Swiss National Bank may intervene to help protect its export market as it did in 2011 – 2012. Will we see action once again or will their gold initiative prevent another intervention?

We’ve got another light forex calendar for the Wednesday afternoon London/morning U.S. session with the U.S. wholesale inventories number being the only economic release today.  That number will come out at 3:00 pm GMT, and it is forecasted to come in around 0.2% vs. 0.7% previous. This is a low to mid tier event, so we most likely won’t see any reaction to the news without a huge surprise.

Risk sentiment will most likely be the driver for currency price action once again with Asia and European markets in the red, and volatility should pick up a bit as Canadian and U.S. traders come back from yesterday’s holidays, especially as they get a chance to price in today’s Bank of England inflation report.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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