London Session Forex Recap – Jan. 8, 2015

  • German Factory Orders m/m: -2.4% vs. -0.8% forecast, 2.9% previous
  • U.K. Halifax House Price Index m/m: 0.9% vs. 0.3% forecast, 0.4% previous
  • European Producer Price Index m/m: -0.3% vs. -0.1% forecast, -0.3% previous
  • European Retail Trade m/m: 0.6% vs. 0.2% forecast, 0.6% previous
  • European Economic Sentiment Index: 100.7 vs. 101.2 forecast, 100.7
  • Bank of England holds official bank rate at 0.5% and monthly bond-buying program at 375B GBP

The euro takes another dive as EUR/USD breaks below the 1.1800 handle in the morning London session. The forex calendar was heavy with European economic data, mostly in the red as German factory orders, sentiment, and producer price inflation all come in below expectations and/or previous reads. The only ray of light comes from European retail trade data, beating lower expectations but coming inline with previous reads. The euro is down across the board with momentum still going strong into the U.S. session:

EUR/USD is down 70 pips (-0.60%) to 1.1767, EUR/GBP is down 22 pips (-0.29%) to .7811, and EUR/AUD is down 140 pips (-0.96%) to 1.4513

Broad risk sentiment seems to be on the upswing with global equity markets almost all in the green going into U.S. trade.  For currencies, this typically means a weakening yen as forex traders sell low yielding currencies to buy high yielding currencies (like the comdolls), which is what we’re seeing today.

USD/JPY is up 54 pips (+0.46%) to 119.78, AUD/JPY is up 78 (+0.82%) to 97.08, and NZD/JPY IS

And finally, the Bank of England’s monetary policy committee decided to hold monetary policy as-is (0.50% main lending rate; 375B GBP month bond purchasing program). No big reaction from Sterling on the news, which is typical as we don’t hear thoughts from the BOE until the meeting minutes are released later in the month.

The forex calendar for the Thursday afternoon London/morning U.S. session is light with a few mid-to-low tier events in the line up.

At 1:30 pm GMT, we’ll get the monthly read on the Canadian house price index (0.1% forecast/previous) and the weekly U.S. initial claims data (290K forecast vs. 298K previous).  Both aren’t normally market movers, but we may see really quick action in the Greenback on that jobless data.

At near the close of the U.S. session at 3:00 pm GMT, we’ll get U.S. consumer credit data ($15B forecast vs. $13.23B previous). Again, this is not normally a market mover, but if we see a downside surprise to the positive U.S. economic trend, we could see volatility pick up for a moment on the news.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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