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The marketplace forex signals is showing it is in a risk-off mood after the very poor UK GDP report and misses in Australian and Canadian inflation information. The Swiss franc stands out as the top performer as the pound is lagging severely.

Proceeding into the week there were many event risks revealed in relation to the UK. Primarily there was inflation details, the Bank of England minutes as well as a speech from BOE Governor Mervyn King. The secondary risk was from GDP but it really turned into a doozie – falling at a 0.5% pace in the 4th quarter when compared to the +0.5% that was anticipated. The soft quarter dropped the year-over-year performance of the UK economy to 1.7% from 2.7% and ended up being way below the 2.6% estimated.

GBP/USD is off more than 200 pips after the awful report. It’s particularly infrequent for GDP to miss so badly. Cold December weather conditions had been a mitigating component yet even taking out the downturn in that month, the Office of National Statistics said progress would have been “flattish.”

In Australia, inflation data fell short of estimations which will likely drive the RBA to the sidelines a tad longer than market players were expecting. The CPI climbed 0.4% in the 4th quarter when compared to to the 0.7% estimated. The Australian dollar is the second-worst performing G10 currency.

A similar story played out in Canada in which the December CPI was flat when compared to the 0.1% boost expected. Eliminating food and energy, prices fell 0.3% compared to the 0.1% predicted. The results remove any kind of tension on the Bank of Canada to increase interest rates.

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