London Session Recap – Sept. 2, 2014

  • Swiss GDP q/q comes in lower: 0.0% vs. 0.5% forecast/previous
  • U.K. Construction PMI better-than-expected: 64 vs. 61.5 forecast, 62.4 previous
  • European PPI inline with -0.1% forecast, but below 0.2% previous

We’re seeing plenty of volatility and directional moves in currencies this morning on plenty of news, data, and forex traders coming back from holiday.

Probably the biggest move of note are happening in the British Pound, which is taking a hit ahead of a referendum vote that may decide whether we see Scottish independence from the U.K.  If Scotland leaves the U.K., that creates uncertainty–both economic and political–that will force traders to step away from U.K. assets in the short-term at least.  Sterling price action is mixed on the session, but down big against the Greenback and franc:

GBP/USD is down 72 pips (-0.44%) to 1.6532, GBP/CHF is down 50 pips (-0.33%) to 1.7808

Also of note is the continued rebound in the euro, which started yesterday without a direct catalyst.  With continued tensions between Russia and Ukraine, and another weak inflation read this morning, best guess is we’re seeing profit taking ahead of this week’s ECB meeting on the massive beating the euro has taken this Summer.  Euro pairs are up pretty big on the session, with exception against the Greenback:

EUR/USD down 14 pips (-0.10%) to 1.3114, EUR/JPY is up 63 pips (+0.47%) to 137.58, and EUR/NZD is up 74 pips (+0.47%) to 1.5740

We won’t see economic catalysts again on forex calendar until the near end of the U.K. trading session, when we get U.S. data starting at 2:45 pm GMT.  That’s when we’ll get the a read from U.S. manufacturing PMI, forecasted to come inline with the previous read of 58. It’s a low tier event so we probably won’t see a reaction without a big surprise.

Then at 3:00 pm GMT, we’ll get U.S. construction spending, IBD consumer optimism, and ISM manufacturing PMI data.  The latter is the big potential market mover of the bunch, with expectations we’ll see a tick lower to 57 vs. 57.1 previous. ISM manufacturing PMI reads have been on an uptrend since February, so it’s likely we will see that trend continue given recent positive data from the U.S.

Finally, geopolitical tensions are picking up in Ukraine as previously mentioned, so stay on your toes and be ready to react because risk sentiment is still a big catalyst for currency traders.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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