London Session Recap – June 23, 2014

  • European PMI data mostly weaker-than-expected
  • German Flash Services PMI: 54.8 vs. 55.8 forecast, 56 previous
  • German Flash Manufacturing PMI: 52.4 vs. 52.5 forecast, 52.3 previous
  • European Flash Manufacturing PMI: 51.9 vs. 52.1 forecast, 52.2 previous
  • European Flash Services PMI:  52.8 vs. 53.3 forecast, 53.2 previous

Currencies presented plenty of opportunities for forex traders during the morning London session thanks Asia momentum carry over and European PMI data.

First, we saw comdolls rally in Asia thanks to the better-than-expected Chinese PMI data release. The thinking goes, when China is doing well so does the Asia comdolls because of China’s demand for their raw materials.  We’ve seen this reaction many times and today was no exception as the Aussie and Kiwi took off on the news.  While slowing a bit, the momentum carried over into the European trading session, where the comdolls remain elevated for the session and with the Aussie leading the way:

AUD/USD is up 62 pips (+0.66%) to .9443, NZD/USD is up 46 pips (+0.54%) to .8735, and AUD/NZD is up 28 pips (+0.27%) to 1.0810

We also got fresh European PMI data–it wasn’t good.  While most of the reads are still above the 50.0 level (above 50.0 indicates sector expansion), there seems to be a general downtrend in this data over the past several months, especially in manufacturing.  The Euro is down on the session, especially against the comdolls thanks to the aforementioned news:

EUR/JPY is down 138.39 (-0.23%) to 138.39, EUR/AUD is down 89 pips (-0.62%) to 1.4391, and EUR/NZD is down 63 (-0.41%) to 1.5559

For the first London and U.S. trading session of the week, the economic calendar is light with only a couple of U.S. data points in the lineup.

At 2:45 pm GMT, we’ll get the U.S. Flash Manufacturing PMI number, forecasted to come in at 56.0 vs. 56.4 previous.  And at 3:00 pm GMT, we’ll get the existing home sales data with the forecast coming in at 4.74M homes sold vs. the 4.65M previous read.  The latter of the two has the potential for real impact on the FX market, but because it’s mid-tier, any reaction would most likely be very short lived.

Risk sentiment seems to be mixed thanks to the divergence in Asia and European data, so look for momentum to possibly continue as we saw in both earlier sessions, particularly in the safe haven currencies and the comdolls.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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