London Session Forex Recap – Dec. 15, 2014

  • Swiss Producer and Import Prices m/m: -0.7% vs. -0.1% previous
  • U.K. CBI Industrial Trends: 5% bal vs. 3% bal forecast/previous

Despite a very light forex calendar, we did see health volatility in the morning London trade, possibly due to weekend news.  The biggest story to me for the session seems to be the U.S. dollar finding strength right from the London open. No U.S. economic data releases during that time of course, so I think European traders may be pricing in the $1.1 trillion spending bill passed on Saturday.  This effectively averts a U.S. government shutdown and brings a little bit of certainty back to the markets.

We also have news of a $8.7B buyout of PetSmart (U.S. company) by BC Partners (a European private equity consortium). This means more Greenbacks need to be bought to make the deal happen, so it is possible we could be seeing this influence today’s price action.

Whatever the case may be, the Greenback continues to trade higher against the majors on the session but momentum may be slowing down for now:

EUR/USD is down 36 pips (-0.29%) to 1.2422, USD/JPY is up 8 pips (+0.07%) to 118.85, and USD/CHF is up 35 pips (+0.37%) to .9665

Another interesting currency move of note is the roller coaster ride in the Australian dollar, first rallying at the London open only to reverse and weaken against the majors mid London morning session. The choppy price action could be linked to sentiment shifts sparked by the hostage crisis in Sydney that currently ongoing.  The move lower for the Aussie seems to still have legs to the downside and is definitely a market to watch as the situation unfolds:

AUD/USD is down 35 pips (-0.41%) to .8205, AUD/JPY is down 32 pips (-0.33%) to 97.56, and EUR/AUD is up 22 pips (+0.15%) to 1.5129

The forex calendar for the Monday afternoon London/morning U.S. session is pretty active with a basket of economic data points to give us an updated picture on the U.S. economy.

Starting at 1:30 pm GMT, we’ll get the Empire State survey number for a look at manufacturing sentiment in the New York region.  The forecast is for a tick higher from 10.16 previous to 12.0 expected. Then at 2:15 pm GMT, we’ll get the capacity utilization and industrial production numbers for a broad look at economic activity in the U.S., both forecasted to tick higher as well.

And at 3:00 pm GMT, we’ll get the NAHB Builders survey data for a fresh look on housing demand in the U.S., with a forecast of a slight tick higher to 59 vs. 58 previous.  All of the U.S. data points are of mid-tier importance, so the reactions tend to be small and short-lived without a big outlier number. But they could have a little extra weight as a last minute influence to this weeks FOMC monetary policy decision.  If we see more positive U.S. data, forex traders could possibly buy up more Greenbacks in anticipation of hawkish rate hike rhetoric from the Fed.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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