London Session Recap – Sept. 1, 2014

  • German GDP (final) stays at -0.2% forecast/previous reads
  • Swiss Manufacturing PMI weaker at 52.9 vs. 54.3 previous
  • European Manufacturing PMI ticks slightly lower to 50.7 vs. 50.8 forecast/previous
  • U.K. Manufacturing PMI lower to 52.5 vs. 55.1 forecast, 54.8 previous
  • U.K. Consumer data is mixed – Net Consumer Credit came out at 1.1B GBP vs. 0.7B GBP previous; Mortgage Approvals down to 66.6K vs 67.1K previous

We actually saw good forex volatility to start out the week for a change thanks to Manufacturing PMI data from Europe & the U.K., and more Yen weakness.

Unfortunately for Europe, it was nearly all bad news as we continue to see a downtrend in sentiment from business managers, indicating we’ll continue to see weakness in the near term.  After being beaten down during the Asia session, the euro actually jumped on the news, possibly indicating traders were already pricing this in ahead of time. EUR/USD is now up 6 pips (+0.05%) to 1.3136 after hitting 1.3120 lows.

The price action in the British Pound was much more lively as we not only saw weak manufacturing PMI data from the U.K., but also slightly positive consumer reads.  Mortgage approvals were below previous but above expectations of 66K, and consumer credit surprised many with a much higher number at 1.1B GBP vs. the 0.6B GBP forecast.  The initial reaction was a quick selloff in Sterling, but it seems to have been quickly faded across the board to keep the day’s rally going in most pound pairs.

GBP/USD  is up 23 pips (+0.14%) to 1.6617, GBP/CHF is up 37 pips to 1.5272, and GBP/JPY is one of the big gainers of the day, up 61 pips (+0.35%) to 173.28

Also of note is weakness in the Japanese Yen as it looks like forex traders continue to price in Friday’s batch of weak Japanese data.  Speculators may be now getting ready for a possible change in tune by the BOJ this week, who may have to adjust their outlook given the weakness we’re starting to see since the April tax hike.

USD/JPY is up 27 pips (+0.26%) to 104.26, EUR/JPY is up 30 pips (+0.22%) to 136.96, and the biggest mover on the session is NZD/JPY, up 47 pips (+0.55%) to 87.40

The forex calendar for the first afternoon U.K./morning U.S. session of September is empty as both Canada and the U.S. trading will be closed due to the Labor Day holiday.  That means we’ll probably see liquidity and volatility dry up after the European close, and that geopolitical news will be the only likely drivers of the U.S. session.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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