London Session Forex Recap – Jan. 21, 2015

  • U.K. Unemployment Rate: 5.8% vs. 5.9% forecast, 6.0% previous
  • U.K. Claimant Count Change: -29.7K vs. -25K forecast, -29.6K previous
  • Bank of England Meeting Minutes released: 9-0 vote to hold policy
  • Swiss ZEW Survey: -10.8 vs. -4.9 previous

The sentiment spurred by the Bank of Japan’s monetary policy statement earlier continued to have influence in the morning London session.  With the BOJ announcing no new plans for further stimulus, Japanese yen traders lightened up on short positions, which continued through European trade.  Yen pairs are down on the session:

USD/JPY is down 124 pips (-1.05%) to 117.53, EUR/JPY is down 101 pips (-0.74%) to 136.15, and GBP/JPY is down 226 pips (-1.27%) to 177.60

The British pound is the other big mover on the session, mainly on the release of the Bank of England meeting minutes which shows that recent dissenters Martin Weale and Ian McCafferty dropping their calls to raise rates. This sent Sterling quickly tumbling after the news, with momentum still going strong to the downside heading into the U.S. trade:

GBP/USD is down 22 pips (-0.15%) to 1.5118, EUR/GBP is up 41 pips (+0.55%) to .7665, and GBP/CHF is down 206 pips (-1.56%) to 1.3050

The forex calendar for the Wednesday afternoon London/morning U.S. session is filled with events from both the U.S. and Canada to hopefully keep currency action going.

At 1:30 pm GMT, we’ll get a fresh read on the U.S. housing sector with housing starts (1.04M forecast vs. 1.03M previous) and building permits data (1.06M forecast vs. 1.05M previous), as well as wholesale sales data (0.1% previous) from Canada for a read on the consumer sector. These are mid-tier events, so we may not see much reaction from the markets unless we get a big surprise in the actual read vs. forecast/previous.

At 3:00 pm GMT, we’ll get the big event of the session in in the form of the Bank of Canada monetary policy statement. The expectation is for the BOC to hold off on any policy changes, keeping the main overnight rate at 1%. It’ll be interesting to hear the BOC’s thoughts and commentary on the fall of oil prices and its affect on the Canadian economy at their press conference, scheduled at 4:15 pm GMT.  Whatever the outcome may be, it looks like currency traders are expecting something good as it rallies heading in to the U.S. session, and should remain pretty active after the event. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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