London Session Recap – March 3, 2014

  • Swiss Manufacturing PMI better-than-previous: 57.6 vs. 56.1
  • European Manufacturing PMI comes out mostly better-than-expected; the broad read comes in at 53.2 vs. 53.0 forecast
  • U.K. Manufacturing PMI comes inline with forecasts at 56.9, slightly better-than -previous of 56.6
  • Risk aversion behavior continues to be a market driver on tensions between Ukraine and Russia.

We’ve got currencies moving a bit in the morning London forex session thanks to a slew of European data points and geopolitical risk aversion.

The forex market moved inline with the usual risk aversion playbook as safe havens continue to benefit from geopolitical and economic fears. Tension between Russia and Ukraine sparks fear of war between the two, while weak Chinese manufacturing PMI data also contributed to traders taking risk off of the table as soon as the market opened.

We did see mostly positive European manufacturing PMI data during the morning London session, with Germany beating forecast (54.8 vs. 54.7 forecast) and France printing higher-than-previous (49.7 vs. 48.5 prev) numbers.  While this data probably helped support risk taking a bit, safe havens continued to benefit through the session.

USD/JPY is down 53 pips (-0.53%) to 101.23, EUR/JPY is down 107 pips (-0.77%) to 139.33, and GBP/JPY is currently down 112 pips (-0.67%) to 169.20.  On a side note, the U.S. dollar is up big time against the Russian Ruble +1.83% to 36.53.  Big volatility should continue with this pair as the situation escalates.

We’re also seeing renewed weakness in the Canadian dollar ahead of economic data today: USD/CAD is currently up 42 pips (+0.38%) to 1.1106 and GBP/CAD is up 43 pips (+0.24%) to 1.8567.

Coming up for the rest of the first trading session of the week, we’ve got inflation data from Canada (Industrial PPI and Raw materials price index) and the U.S. (Core PCE Price Index) at 1:30 pm GMT.  Besides inflation data, the U.S. economic calendar is actually pretty packed for the morning session with ISM Manufacturing data to be the most watched event for the Greenback.

And of course, geopolitical risk will continue to put pressure on risk taking, so there is a strong possibility for more flows into safe havens and pay attention to the news for any new developments in the Russia and Ukraine story.  Could be a tricky morning of trade–Stay frosty traders!

See also:

Asian Session Recap

U.S. Session Recap

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