London Session Forex Recap – Dec. 17, 2014

  • U.K. Claimant Count Change: -26.9K vs. -20K forecast, -25.1K previous; Claimant Count Rate: 2.7% vs. 2.7% forecast, 2.8% previous
  • U.K. Unemployment Rate: 6% vs. 5.9% forecast, 6% previous
  • BOE Meeting Minutes Released; policymakers focused on falling oil  in December meeting
  • European HICP y/y (final): headline inline with 0.3% forecast/previous; core inline with 0.7% forecast/previous

Forex volatility remained elevated but choppy during the morning London session, with fresh catalysts coming from positive U.K. unemployment data and BOE meeting minutes, but no direction as the current market drivers continue to be what’s going on with the Russian rouble and the continual slide in oil prices. We also have the FOMC monetary policy decision later in the session, which tends to keep traders on the sidelines from making big bets.

The main currency move of note was probably the rally in the U.S. dollar, possibly rallying in anticipation of commentary from Fed Chair Janet Yellen that we may see rate hikes sooner than later:

EUR/USD is down 61 pips (-0.49%) to 1.2447, USD/JPY is up 81 pips (+0.69%) to 117.19, and GBP/USD is down 52 pips (-0.34%) to 1.5694

The other currency move of note is a bounce higher in the Canadian dollar, possibly up ahead of potential positive Canadian data coming up or a small bounce in oil prices, with light sweet crude futures back up to the $55 handle after hitting a low of $53.6 yesterday.  Whatever the case may be, the Loonie saw strength right from the London open; after hitting a high around 1.6558, USD/CAD has strong momentum lower currently trading around the 1.1630 handle.

The forex calendar for the Wednesday afternoon London/morning U.S. session light but potentially action packed with top tier events from the U.S.

At 1:30 pm GMT, we’ll get Canadian wholesale sales (0.2% forecast vs. 1.8% previous), U.S. current account (-$97.5B forecast vs. -$98.5B previous) and U.S. consumer price inflation data (-0.1% forecast vs. 0.0% previous). The U.S. CPI data is the likely market mover, and with oil taking a dive, it’s very likely we’ll see a few ticks lower in consumer prices.

The reaction in the early U.S. session may be limited because it is FOMC decision day in the U.S.  Coming out at 7:00 pm GMT is the latest monetary policy decisions from the Federal Reserve, with a follow-up press conference at 7:30 pm GMT.  The expectation is that we won’t see a change to the federal funds rate from the 0.25% target area, but the focus is whether or not we’ll see the “considerable time” language (in reference to when the Fed may raise rates) removed from the statement. If removed, we could see a spike higher in the Greenback and vice versa. Whatever the results may be, it should spark lots of volatility so stay frosty and trade safe!

See also:

Asia Session Recap

U.S. Session Recap

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