London Session Forex Recap – Oct. 20, 2016

  • German Producer Price Index m/m: -0.2% vs 0.2% forecast, -0.1% previous
  • German Producer Price Index y/y: -1.4% vs. -1.2% forecast, -1.6% previous
  • European Current Account (sa): €29.7B vs. €29.5B previous
  • Swiss Trade Balance: CHF4.37B vs. CHF3.02B previous
  • U.K. Retail Sales m/m: 0.0% vs. 0.3% forecast, -0.2% previous
  • U.K. Core Retail Sales m/m: 0.0% vs 0.2% forecast, -0.1% previous
  • European Central Bank holds the Benchmark Interest Rate at 0.00%

The ECB monetary policy event had traders mostly sitting on the sidelines during the morning London session, with exception to a little action from U.K. Retail Sales.

Major Events/Reports:

ECB holds interest rates– As expected, the European Central Bank decided to hold the main refinancing rate at 0.00%, the marginal lending rate at 0.25%, and the deposit rate at -0.40%.  Their latest statement also shows that monthly asset purchases of €80B will continue to run until March 2017 and beyond if necessary.

The euro was pretty quiet leading up to and after the release of the latest monetary policy statement, which means traders are waiting to hear Mario Draghi speak in just a few minutes before making serious moves.  Questions to look out for at are whether or not we will see an increase in stimulus efforts and whether or not we will see changes in criteria for what type of bonds they can buy.  The press conference (watch live here) could spark a wild ride in the euro so get ready and hang on tight!

U.K. Retail Sales flat –  The warm weather and soaring prices were to blame for another month in row of flat retail sales. Demand for winter clothing wasn’t there with the unseasonably warm weather and the inflation sparked by the fall in Sterling has the British thinking twice before eating out. The reaction in the British pound was mixed, but it’s mostly weaker since the data was released.

Mixed risk sentiment and price action – European equity were quiet and mixed on the session, typical behavior ahead of a major central bank event.

  • The pan-European FTSEurofirst 300 was down by 0.07% to 1,354.34
  • The blue-chip Euro Stoxx 50 was up by 0.29% to 3,064.72
  • Germany’s DAX was up by 0.23% to 10,670.42
  • The U.K.’s FTSE 100 was down 0.06% to 7,015.65

U.S. equity futures have barely made a move and mixed as well ahead of the ECB press conference:

  • S&P 500 futures were up by 0.08% to 2,139.75
  • Nasdaq futures were up by 0.11% to 4,835.50

Crude oil dips on likely profit taking after its recent strong rally:

  • U.S. crude oil was down by 0.95% to $51.11 per barrel
  • Brent blend crude oil was down by 1.01% to $52.14 per barrel

Major Market Movers:

GBP – Mixed but mostly weaker, likely on the slightly disappointing retail sales data

GBP/USD was down 24 pips (-0.20%) to 1.2261, GBP/JPY was flat trading at 127.06, EUR/GBP was up 22 pips (+0.26%) to .8951

USD – Dollar was mostly flat on the session during mixed morning London trade:

USD/JPY was up 17 pips (+0.17%) to 103.61, USD/CHF was down 9 pips (-0.10%) to .9879, EUR/USD  is up 9 pips (+0.9%) to 1.0982

EUR – choppy but mostly higher ahead of the ECB statement and press conference later

EUR/JPY was up 32 pips (+0.29%) to 113.77, EUR/CHF was flat trading at 1.0848, EUR/AUD was up 102 pips (+0.72%) to 1.4309

Watch Out For:

  • 12:30 pm GMT: U.S. Philadelphia Fed Survey (5 expected, 12.8 previous)
  • 12:30 pm GMT: U.S. Initial Claims (250 expected, 246 previous)
  • 2:00 pm GMT: U.S. Leading Indicator (0.2% expected, -0.2% previous)
  • 2:00 pm GMT: U.S. Existing Home Sales (5.35M expected, 5.33M previous)

See also:

Asian Session Forex Recap

U.S. Session Recap

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