London Session Forex Recap – Nov. 19, 2014

  • European Current Account: 30B EUR vs. 22.8B EUR previous
  • Credit Suisse ZEW Survey index:  -7.6 vs. -30.7 previous
  • Bank of England meeting minutes released: 7-2 vote to hold policy

The big mover of the morning London session is the British pound, which spiked higher after the release of the minutes from the most recent Bank of England’s monetary policy meeting. The surprise was that the minutes diverged from the sentiment given by BOE Governor Mark Carney at the Inflation report by citing concerns inflationary pressures may build.

With the BOE apparently less dovish than expected by the markets, forex traders immediately lightened up on pound shorts, pushing up pound pairs to session highs where they are currently holding:

GBP/USD is up 45 pips (+0.28%) to 1.5673, GBP/JPY is up 167 pips (+0.93%) to 184.31, and EUR/GBP is down 17 pips (-0.22%) to .7998

The euro is up on the session after a positive current account read (EUR/USD is up 4 pips to 1.2537), and the commodity dollars seem to be down broadly, possibly pulled lower by the Aussie (due too lower metals prices and a slowing demand from China). And currency traders seem to be back on track with the Japanese yen sell off but mixed because of commodity weakness:

AUD/JPY is down 30 pips (-0.30%) to 101.57, NZD/JPY is down 12 pips (-0.14%) to 92.43, and USD/JPY is up 73 pips (+0.63%) to 117.56

The  forex calendar for the Wednesday afternoon London/morning U.S. session is pretty light with an update on the U.S. housing sector, and a look at the closely watched minutes from the last Federal Open Market Committee meeting.

At 1:30 pm GMT, we’ll get the U.S. building permits and housing starts data, both expected to slightly tick above their previous reads of 1.03M and 1.02M respectively. These are mid-tier economic data and there is little volatility in the data as they both tend to come in around 1.0M per month, so we probably won’t see too much of a reaction in the Greenback unless there is a huge surprise.

At 7:00 pm GMT, we’ll get the minutes from the October 28 – 29 FOMC meeting, where we saw the end of the QE3. Forex traders will likely pay attention to commentary on the jobs sector and the Fed’s outlook on inflation, in which the market was surprised that Yellen and company weren’t more dovish given the downtrend in global inflation data recently. It’s definitely an event to watch as any surprises can cause big short-term ripples throughout the global financial markets. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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