London Session Recap – Aug. 1, 2014

  • French Manufacturing PMI: 47.8 vs. 47.6 forecast/previous
  • German Manufacturing PMI: 52.4 vs. 52.9 forecast/previous
  • European Manufacturing PMI: 51.8 vs. 51.9 forecast/previous
  • U.K. Markit Manufacturing PMI: 55.4 vs. 57.2 forecast/previous

With equity markets taking a big hit around the world since the Thursday U.S. session and the weak manufacturing PMI number from Europe this morning, we saw a flow out of “high-yielding” currencies and into the safe havens like the Japanese Yen and the Swiss Franc.  Most notable in taking a hit among the currencies is the British Pound after ANOTHER weak data read, fueling more fire for the bears that the U.K. recovery is losing its grip. GBP/USD has dropped another 50 pips on the session but losing momentum around current levels, 1.6830.

And euro bulls probably benefitted the most from safe haven flows as the euro has been treated as a low-yielder since cutting rates earlier this year.  The big moves of the session are coming from the Euro and Swissy crosses, especially against Sterling:

EUR/NZD is up 66 pips (+0.42%) to break above 1.5800, GBP/CHF is down 64 pips (-0.42%) to 1.5276, and EUR/GBP is the big winner of the day, up by 36 pips (+0.46%) to .7960

Since we’re in a new month, it’s once again time for the mother of all economic reports: the U.S. employment data!

At 1:30 pm GMT, we’ll get various reads on the U.S. employment picture, most notably with the Non-Farm Payroll report and the unemployment rate.  The expectation is for the U.S. to have a net change of +230K jobs while the unemployment rate to hold at 6.1%.  Of course, any reads outside of those expectations should drive more volatility, but if they do come inline don’t forget about past revisions as they can also have a big influence on how market players price will in their next move.

And the party doesn’t stop with the employment numbers as we’ll get a few more bits of U.S. economic data to close out the week.

Starting at 2:45 pm GMT, we’ll get a string of economic data points.  First, the U.S. read on Manufacturing PMI with an expectation of ticking higher to 56.5 vs. 56.3 previous.  Ten minutes later at 2:55 pm GMT, we’ll see the final read on the University of Michigan Sentiment survey number, forecasted to tick higher as well to 81.8 vs. 81.3 previous.

Finally, at 3:00 pm GMT, we’ll get U.S. construction spending (0.5% forecast vs. 0.1% previous) and the last big number of the day, ISM manufacturing.  The ISM manufacturing number is a leading indicator on business conditions, with a forecast of coming in at 56.1 vs. 55.3.  This report could provide one last fast opportunity in what has been a very volatile week.  Stay frosty forex traders!

See also:

Asia Session Recap

U.S. Session Recap

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