- German PPI m/m: 0.0% vs. 0.0% forecast, -0.1% previous; y/y -1.0% vs. -1.0% forecast, -0.8% previous
- European Current Account (sa): 18.9B EUR vs. 21.6B EUR
We got more weak European data to start off the morning London session, but for the most part, it been mostly a quiet start to the new forex trading week.
German producer prices came in slightly better than the previous negative read, but at 0.0% change for the monthly change and -1.0% for the annual , it’s hardly a read the Europeans want to see as conditions continue to weaken in the euro zone. The initial reaction was a bearish one for the euro, but was quickly reversed at the London open. It looks like London traders went right into USD selling mode on hints late last week that the era of easy monetary policy may be extended. The sentiment was strong enough in EUR/USD that even the weaker European current account data did nothing to bring the euro down. Since nearly hitting 1.2730 after the German PPI news, EUR/USD moved back up as has as 1.2788 with momentum still to the upside.
Also benefiting from a pullback in the Greenback are sterling and the comdolls, slowing moving higher on the session on a bit of optimism that we’ll continue to see low interest rates for much longer to support the global economies:
GBP/USD is up 54 pips (+0.33%) to 1.6139, AUD/USD is up 30 pips (+0.34%) to .8772, and NZD/USD is up 44 pips (+0.57%) to .7955
Much like the morning London session, the forex calendar for the Monday afternoon London/morning U.S. session is pretty light, but it looks like there’s enough to spark some further action in the comdolls.
At 1:30 pm GMT, we’ll get our lone economic data point from Canada in the form of monthly wholesale sales data. This is an early indicator for the consumer sector as retailers place their orders based on their expectations on future consumer demand. The forecast is for last month’s read to come in at -0.3%, inline with the previous read. This number could spark good volatility for the Loonie, especially as forex traders get their positions ready for the Bank of Canada monetary policy this Wednesday at 3:00 pm GMT.
Besides that, today’s market drivers could continue to be the news from last week that the FOMC and BOE may keep rates lower than previously thought. Easy money tends to mean more “risk-on” behavior like bullish equities and high yielding currencies, and possibly a further pullback in the U.S. Dollar and/or Japanese yen. Stay frosty!
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