London Session Forex Recap – Dec. 5, 2014

  • German Factory Orders m/m: 2.5% vs. 0.5% forecast, 1.1% previous
  • Swiss Foreign Currency Reserves: 462.4B vs. 460.6B previous
  • U.K. Consumer Inflation Expectations: 2.5% vs. 2.8% previous
  • European GDP (2nd Est.) q/q inline with 0.2% forecast/previous

Forex volatility was relatively light ahead of the U.S. NFP report, but we did see continued weakness in the Japanese yen in the morning London session.

The Japanese yen continued the renewed weakness, which was kicked off by weakness in Japanese leading indicators data during the Asia session. Selling picked up right at the London open to push the yen to session and intra-week lows across the board:

USD/JPY is up 77 pips (+0.65%) to 120.55, EUR/JPY is up 82 pips (+0.56%), and GBP/JPY is up 139 pips (+0.74%) to 189.12

Other currency moves of note include a rally in the British pound from session lows with no apparent catalyst.  The buying began right before the London open, which could possibly be in anticipation of the consumer inflation data.  Whatever the case may be, the morning London session was very bullish for Sterling, including a rally in GBP/USD to 1.5685 after after hitting session lows of around 1.5620 in Asia.

The forex calendar for the final afternoon London/morning U.S. session of the week is going to be action packed with reads on employment conditions in North America, including the always highly anticipated U.S. Non-Farm Payrolls report at 1:30 pm GMT.

The expectations for the Canadian report is for a net change of around 5K vs. 43.1K in October, and for the unemployment rate to tick higher to 6.6% vs. 6.5% previous.  The October number was another big positive surprise relative to expectations like September, and if we see another positive read to go along with recent strong data from Canada, the Loonie could continue its recent rally.

The forecast for the U.S. Non-Farm Payrolls number is around 230K vs. 214K previous, and the unemployment rate to remain at 5.8%.   This is going to be the last look on employment conditions in the U.S. for 2014, so it could have a strong influence on sentiment for the Greenback going into year end.  Whatever we get, it’ll most definitely be fast moves for both the U.S. and Canadian dollars during this hour.

And to close out the economic calendar for the week, we’ll get Canadian merchandise trade and U.S. trade balance (also at 1:30 pm GMT), U.S. factory orders data at 3:00 pm GMT, and the U.S. consumer credit data point at 8:00 pm GMT.  These are all mid-tier reports so it’s unlikely they’ll have much influence on forex price action on NFP data day, but as always, it’s a good idea to be aware of any economic releases and have plans in place to manage risk.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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