London Session Forex Recap – Feb. 24, 2015

  • German GDP q/q (Final): inline with 0.07% forecast/previous
  • French INSEE Manufacturing Confidence: inline with 99 forecast/previous
  • European HICP m/m: -1.6% vs. -1.6% forecast, -0.1% previous; y/y inline with -0.6% forecast/previous
  • European HICP core y/y inline with 0.6% forecast/previous

The New Zealand dollar continued its drop in the morning London session, sparked by the lower inflation outlook released in the Asia trading session. As I mentioned in my Asia wrap, this ignites sentiment that a rate cut may be due by the RBNZ so  we could see further pricing in of that sentiment going into U.S. trade. NZD/USD is hitting session lows, down 77 pips (-1.04%) to .7438.

The euro is broadly higher on the session, likely on London and European traders pricing in the recently submitted Greek reform plans that offer major compromises and is likely to be accepted by the their European partners in order to receive the bailout extension. The shared currency’s momentum higher is still strong, especially against the current weak comdoll sentiment:

EUR/NZD is up 167 pips (+1.11%) to 1.5226, EUR/AUD is up 83 pips (+0.57%) to 1.4606, and EUR/CAD is up 75 pips (+0.51%) to 1.4317

Finally, the British pound is on the move to the downside, likely on comments by Bank of England Governor Mark Carney on the BOE’s inflation outlook. Their stated goal is to bring inflation back to their 2 percent goal within two years, and they urged employers now to offer lower wages in this low inflation environment.

Forex traders didn’t seem to take to this event to kindly to Sterling as the market moves lower, after hitting session highs right at the London open. Overall, Sterling is mixed on the session, but momentum seems to be picking up to the downside in some pound pairs:

GBP/USD is down 32 pips (-0.21%) to 1.5422, GBP/CHF is down 33 pips (-0.22%) to 1.4644, EUR/GBP is up 15 pips (+0.20%) to .7344

The forex calendar for the Tuesday afternoon London/morning U.S. session is pretty light with a few U.S. economic data points in the lineup, but potentially volatile with central bank testimony throughout the session.

At 2:00 pm GMT, we’ll get the S&P Case-Shiller home price data for a fresh read on the U.S. housing sector. The forecast is for a 4.3% rise vs. the previous number 4.31%.  This is a mid-tier event, so don’t look for too much volatility unless there’s a big divergence between the forecast/previous numbers vs. the actual read.

And to wrap up the Tuesday London session, we’ll get the U.S. consumer confidence data at 3:00 pm GMT. This is a top tier economic data point, so this is potential market mover with forecast 99.5 vs. 102.9. This number has been volatile but steadily rising over the last couple of years.

But the event to watch at this hour is Federal Reserve Chair Janet Yellen’s testimony to the U.S. Senate. Questions on interest rates and transparency will likely come up, which could likely spark fast volatility if we get new insights on when they may raise interest rates in the U.S. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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