Market Session Recaps

London Session

Tue, May 13 2008, 12:06 GMT
by Forex.com Research Desk

FOREX.com


Brace yourself for the roller coaster known as the London Session. The heightened volatility continues to be the central theme of trading, though the net price movement of currencies has been utterly unspectacular. In fact, momentum traders have likely had a difficult time dealing with multiple false breaks and the sharp spikes and drops within average-sized ranges. The key data for the session was released at 0830 GMT (0430 EDT). Inflation results out of the UK were huge, aligning with yesterday's robust Producer Price Index readings. Accordingly, the erratic British Pound rocketed to the topside for a short-lived ride, but abruptly retreated as sellers pounced on the currency.

On the London open, the US dollar caught a firm bid versus both the Euro and Pound, sending both pairs reeling. EURUSD held the 1.5500 mark while Cable spilled to 1.9585. USDJPY dripped lower in tandem with an offered EURJPY. At 0830 GMT (0430 EDT), stronger-than-expected UK inflation numbers shocked the market and sent the British Pound flying. GBPUSD soared and EURGBP plummeted. The topside reaction was brief, however, and the ensuing collapse was tremendous. Sellers sold the strength with aggression, crushing the currency and forcing momentum longs to bail out. From the post-data high near 1.9585, GBP plunged versus the Greenback, shedding a full big figure (100 pips). EURUSD hit fresh session lows around 1.5470.

Despite the short-term positioning, the big story is the second consecutive reading of tremendous inflation data. The questions from here are clear: were the results already baked into the British Pound ... and do these numbers impact the future decisions of the Bank of England? Looking ahead, the US economic agenda will keep New York market participants on their toes, beginning at 0830 EDT. Traders will be scoping the Advance Retail Sales numbers to gauge the overall health of the US consumer.      
 

Upcoming Economic Data Releases (New York Session)

  • 0830 EDT US – Apr Import Price Index, consensus: +1.6% MoM, +15.0% YoY (relevance: low)
  • 0830 EDT US – Apr Advance Retail Sales, consensus: -0.2% (relevance: high)
  • 0830 EDT US – Apr Retail Sales less autos, consensus: +0.2% (relevance: high)
  • 1000 EDT US – May IBD/TIPP Economic Optimism, consensus: 38.0 (relevance: low)
  • 1000 EDT US – Mar Business Inventories, consensus: +0.4% (relevance: low)
  • 1700 EDT US - ABC Consumer Confidence, consensus: n/a (relevance: low)

Published on  Tue, May 13 2008, 12:07 GMT

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