London Session Recap – July 1, 2014

  • Swiss Manufacturing PMI: 54 vs. 52.3 forecast, 52.5 previous
  • French Manufacturing PMI: 48.2 vs. 47.8 forecast/previous
  • German Manufacturing PMI: 52 vs. 52.4 forecast/previous
  • European Manufacturing PMI: 51.8 vs. 51.9 forecast/previous
  • German Unemployment Rate steady at 6.7%, Unemployment Change at 9K vs. -10K forecast, 26K previous
  • U.K. Manufacturing PMI: 57.5 vs. 56.8 forecast, 57 previous
  • European Unemployment Rate: 11.6% vs. 11.7% forecast, 11.6% previous

The big story of the London trading session was Sterling after another seeing positive economic read from the U.K.  It looks like the levels of both demand and production are climbing higher, further verifying the strength of the recovery and the possibility of an earlier than expected rate hike from the Bank of England.  The British Pound shot up after the news and has remained elevated ahead of the U.S. trading session:

GBP/USD is up 33 pips (+0.20%) to 1.7138, GBP/CHF is up 36 pips (+0.24%) to 1.5197, and EUR/GBP is down 15 pips (-0.20%) to .7986

Europe’s PMI picture looks mixed with the broad European number ticking a slight notch lower to 51.8, but on the bright side, the broad unemployment rate ticks lower to 11.6%.  Unfortunately for euro bulls, the shared currency is seeing choppiness after the unemployment data, leaving it mixed on the session.  EUR/USD is trading near breakeven just under the 1.3700 handle.

Also of note is price action in the Japanese Yen.  After falling on a weaker-than-expected Tankan survey number during the Asia session, the selling continued at the London open, making it the biggest loser of the day among the major currencies:

USD/JPY is up 22 pips (+0.22%) to 101.54, EUR/JPY is up 31 pips (+0.23%) to 139.02, and the big mover of the session is GBP/JPY, up 75 pips (+0.44%) to break above the 174.00 handle.

For the afternoon London and U.S. trading session we’ll get a plethora of U.S. data, including their own manufacturing PMI data.

At 2:45 pm GMT, we’ll get the U.S. manufacturing PMI number to complete the global look on manufacturing conditions.  The forecasted number is the same as the previous read at 57.5.  Then at 3:00 pm GMT, we’ll get the rest of U.S. data that includes construction spending, IBD consumer optimism, and the big event of the day: ISM Manufacturing data.  The ISM number has been in a steady trend higher through the second quarter of 2014, so the big reaction will most likely happen if we get a reading below the 55.8 forecast or 55.4 previous read.  The U.S. economy is considered to currently have the strongest recovery, so a strong reading may not yield as much volatility as a weak read.

And finally, risk sentiment has been positive as Asia and European equities are up mostly up on the Tuesday session, and liquidity may be slightly lighter than usual for the Loonie as Canadian banks are on holiday for Canada Day.  Stay frosty forex traders!

See also:

Asia Session Recap

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together. In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.  Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!