London Session Forex Recap – Dec. 4, 2014

  • U.K. Halifax House Price Index m/m: 0.4% vs. 0.3% forecast, -0.4% previous
  • U.S. Challenger Job Cuts lower at 35.9K vs. 51.1K previous
  • Bank of England holds bank rate at 0.5% and bond purchases at 375B GBP
  • ECB holds Refinancing Rate at 0.05% and Deposit Rate -0.2% as expected

Forex volatility and price action remained mostly muted in the morning London session, typical behavior for the markets as traders awaited monetary policy decisions from both the ECB and BOE.

The Bank of England decided to hold rates at record lows citing low inflation risks and a weaker outlook on global economic growth. With the expectation for a rate hike is speculated to now be late 2015, the selling pressure came right after the announcement but the volatility remains relatively light. GBP/USD is lower on the news, now lower for the week by 4 pips and testing the 1.5650 minor psychological level.  Price action in Sterling may continue to remain muted as forex traders focus on the ECB.

The ECB made no changes to their interest rate policies as expected. The reaction to the announcement was muted, also as expected since we all know that the real fireworks don’t begin until ECB press conference.  What Draghi will say on quantitative easing will determine the next move for the euro, and volatility will most likely spike up. The press conference begins at 1:30 pm GMT, so be sure to be ready for anything then!

The economic calendar for the Thursday afternoon London/morning U.S. session, it’s light with U.S. initial claims at 1:30 pm GMT and Canadian Ivey PMI data at 3:00 pm GMT.  Both are mid-tier events, and the potential short-term market mover of the two will likely be the Canadian Ivey PMI data, forecasted to tick higher (52.5 forecast vs. 51.2 previous) and potentially support recent bullish sentiment in the Loonie. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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