London Session Recap – January 3, 2014

  • U.K. Nationwide house prices surprises to the upside: 1.4% vs. 0.8% forecast.
  • Switzerland’s KOF leading indicator reads slightly above expectations at 1.95 vs. 1.92 forecast, and much better than the previous read of 1.85.
  • Mixed U.K. consumer data with secured lending (0.9B vs. 1.3B) and net consumer credit (0.6B vs. 0.7B) both weaker-than-expected, while mortgage approvals came in better than expected at 70.8K vs. 69.7K.

2014 is starting out with lots of volatility as we’re seeing a reversal in the risk-on sentiment that dominated December.  There doesn’t seem to be an obvious catalyst, especially given that we saw broad strength in global PMI data yesterday.  

Currencies that saw broad weakness through the end of 2013 on rising risk sentiment, like the Japanese yen and Australian dollar, are big gainers against recently unstoppable sterling and the euro.  Without a news catalyst, this may be profit taking on the arguably excessive moves we saw over the past few months.  EUR/JPY  and GBP/JPY has reversed the 300 pip rise from over the last few weeks, and we’re seeing the commodity dollars having multi-handle moves against the European currencies as well.  

The action may not end with the European trading session as we have several members of the FOMC scheduled to speak today.  Expectations are that they will reiterate their dovish tapering stance, which may be supportive for the Greenback and risk sentiment for the rest of the Friday session.  Of course, if the opposite becomes true–a mention of tightening interest rates sooner than previously thought by the market–it could be an ugly day for risk-on bulls.  Whatever the outcome may be, stay focused and be ready!

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

 Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!