London Session Recap – December 23, 2013

  • China 7-day repo rate rises to 9.8%
  • Bank holiday in Japan
  • German Import Price Index y/y -2.9% vs. -3.1% forecast
  • US Core PCE Price Index m/m inline with forecast at 0.1% 
  • US Personal income weaker-than-expected: +0.2% vs. +0.5%
  • Canadian GDP better-than-expected: +0.3% vs. +0.2% forecast

Trading was  pretty quiet during the Asia and morning London sessions thanks to a bank holiday in one of the major currency trading centers, Japan, as well as light activity typical of this time of the year. This is despite another rise in the Chinese repo rate rising to 9.8%, which indictates more stress and concern for China’s financial markets.  This typically leads to risk aversion behavior for Asia markets and currencies, like the Aussie, but we didn’t see any broad weakness this morning.  This is probably due to the atypical holiday environment we’re currently in.

We did get slightly mixed data from Europe in the form of German Import price index. We got a better-than-expected y/y read as mentioned above, but a weaker-than-expected (but positive) read on the m/m number of +0.1% vs. -0.2% forecast.  This sparked a bit of support for the euro, pushing EUR/USD up about 20 pips since the start of the London session.

The biggest mover for today is probably the Canadian dollar as it seems like the traders that are still around to trade bidded up the loonie ahead of the monthly GDP data; USD/CAD fell approximately 40 pips during the London session.  Looks like they were correct as we saw a better-than-expected read of +0.3% vs. +0.2%.  This may support the loonie until the end of the US session.

For the rest of the European/US overlap, we’ve got the University of Michigan Sentiment read (final) at 2:55 pm GMT.  It’s not normally a big market mover, but with the lower holiday liquidity, we may get some volatility in USD pairs if we see a number far from the 83 forecast.

See also:

U.S. Session Recap

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