London Session Forex Recap – Mar. 5, 2015

  • German Factory Orders: -3.9% vs. -1.0% forecast, 4.4% previous
  • U.K. Halifax House Price Index m/m: -0.3% vs. -0.2% forecast, 1.9% previous
  • BoE Monetary Policy Decision holds rates at 0.50% and bond purchases at 375B GBP/month
  • European Central Bank Monetary Policy Decision: holds refinancing rate at 0.05% and deposit rate at -0.20%

Forex price action was relatively light during the morning London session, normal behavior ahead of the potential volatile monetary policy decisions from both the Bank of England and the European Central Bank. Both kept their monetary policies as-is, making no changes to either interest rates or asset purchasing program.

The euro did make small moves higher going into and after the monetary policy decision release, but we could see the real fireworks later when ECB President Mario Draghi gives his press conference, starting in just a few at 1:30 pm GMT. And we actually saw a pop in the British pound, which doesn’t normal happen on the BOE decision since the central hasn’t made a move on interest rates since 2009, and the bond purchasing program since 2012.

GBP/JPY is up 96 pips (+0.53%) to 183.62, EUR/GBP is down 3 pips (-0.04%) to .7252, GBP/CHF is up 43 pips (+0.29%) to 1.4744

The forex calendar for the Thursday afternoon London/morning U.S. session is filled low-to-mid tier events from the U.S. and Canada, but could be volatile with Draghi on tap to speak in just a few minutes.

At 1:30 pm GMT, we’ll get fresh reads on the U.S. jobs sector in the form of weekly initial claims, unit labor costs and non-farm productivity data. These are mid-to-low tier data points, so it’s likely we won’t see a reaction from forex traders, especially as the ECB begins its press conference on their most recent monetary policy decisions. All eyes will be on ECB President Mario Draghi as we listen for detail on quantitative easing and clues on future monetary policy direction, and this press conference has been a big market mover in the past so be ready for anything.

At 3:00 pm GMT, we’ll get U.S. factory orders (0.2% forecast vs. -3.4% previous) and Canadian Ivey PMI (48.5 forecast vs. 45.4 previous).  The Canadian Ivey PMI data is the likely market mover between the two, but it may not be reacted upon by forex traders if we do get market moving rhetoric from Mario Draghi’s press conference. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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