LONDON SUMMARY

The opening London Session of the week failed to live up to expectations. With the Bank of England (BoE) Monetary Policy Committee (MPC), European Central Bank (ECB), and US Federal Open Market Committee (FOMC) rate decisions all passed, the trading slate has been wiped clean, leaving no obstacles in the way of market players around the globe. With little reason to intentionally reduce exposure, there was a natural inclination to believe London could see an active market. Unfortunately, the opposite came to fruition, as currencies held very tight ranges amid a low-volume session. The lone catalyst was a release of inflation data out of the UK. Otherwise, the charts will show a forgettable Monday for the London morning.

While USDJPY was virtually silent in a grinding 20 pip span, EURUSD saw the healthiest action among the majors. The pair entered the session at 1.3540, roughly at the Asia opening level, and proceeded to decline to the day’s lows around 1.3525 as the USD caught an early bid. USDCHF was the big beneficiary. The currency pair aggressively added 30+ pips from 1.2170 to 1.2200+, taking EURCHF firmly above 1.6500. An Asia outperformer, NZD, found its way higher. NZDUSD bounced around the 0.7360-80 boundaries before popping up to 0.7395. This strength is on the heels of positive economic data released several hours earlier as Steve Lee detailed in the Gain Capital Asia Session Summary, “…better than expected New Zealand retail sales which came in at 1.3% month over month vs. consensus of -.2%.”

The only other noteworthy story came out of the UK by way of the Producer Price Index. At 0430 EDT, the headline April PPI number matched expectations of +0.5%. Accompanying data was weaker than analysts forecasted, such as the PPI Core Output (actual: +0.1%, consensus: +0.3%). This pressured the British Pound, as displayed in the subsequent move in GBPUSD. Cable was trading at 1.9830-35 heading into the release. When the numbers hit the news wires, we saw an immediate drop of 15 points. The pair remained heavy, briefly breaching 1.9800 and hitting the lows of the day. There has been a rebound to pre-data levels, with the currency pair now trading at 1.9815.