London Session Forex Recap – Apr. 9, 2015

  • German Industrial Production m/m: 0.2% vs. 0.1% forecast, -0.4% previous
  • German Trade Balance: €19.2B vs €19.0B forecast, €15.9B previous
  • U.K. Halifax HPI m/m: 0.4% vs. 0.1% forecast, -0.4% previous
  • U.K. Trade Balance: -£3.24B vs. -£2B forecast, -£1.97B previous
  • Bank of England holds interest rate at 0.50% and quantitative easing program at £375B per month

The Aussie and Kiwi buying that started in the Asia session only picked up steam in the morning London forex session.  Again, no direct catalyst for the moves other than the positive AIG construction PMI data, but it’s more likely on the broad risk aversion that is being supported by the recent trend of central banks upping their easy money policies.

AUD/USD added another 50 pips from the London open to reach highs around .7735. NZD/USD is now testing .7600 after hitting lows around .7530 during the Asia session.

The British pound came under pressure after the latest trade balance data shows a widening deficit thanks to weak euro zone demand and a strong currency. We also got news that the Bank of England’s Monetary Policy Committee made no changes to interest rates or the bond purchasing program.

The reaction in Sterling was muted, which is typical given that the statement is released without a press conference and policy has not changed since 2012. Overall, Sterling remains mostly lower on the session but it looks like the weakness may have bottomed out:

GBP/USD is down 30 pips (-0.21%) to 1.4835, GBP/JPY is down 58 pips (-0.33%) to 177.98, and EUR/GBP is up 8 pips (+0.11%) to .7256

The forex calendar for the Thursday afternoon London/morning U.S. session is lacking in top tier economic events, but there are a few mid-tier data points to potential spark short-term forex volatility.

At 1:30 pm GMT, we’ll get the bulk of today’s U.S. session data including weekly initial jobless claims (283K forecast vs. 268K previous) from the U.S., and a fresh read from the Canadian housing sector including building permits data (3.3% forecast vs. -12.9% previous) and house price index data (0.1% forecast vs. -0.1% previous). The initial jobless claims data is the likely market mover among the group, but pay attention to USD/CAD because the housing sector still remains a big driver of growth for any economy.

And at 3:00 pm GMT, we’ll get the U.S. wholesale inventories data (0.2% forecast/previous), which is typically viewed as a leading indicator: rising inventories indicate less business spending demand and vice versa. This is not typically a market mover, but one to watch for short-term volatility if we see a big surprise. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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