London Session Recap – Sept. 3, 2014

  • European Services PMI weaker: 50.3 vs. 51.1 forecast/previous
  • U.K. Services PMI improves: 60.5 vs. 58.5 forecast, 59.1 previous
  • European Retail Trade ticks lower: -0.4% vs. -0.3% forecast, 0.3% previous

Global services PMI data and geopolitical news from Ukraine had forex traders moving and shaking in today’s morning London session.

On the economic data front, we got weak services PMI data from Europe and a better-than-expected read from the U.K. to stir up volatility in the European region.  But the main driver of volatility was probably the news that Russia and Ukraine agree to a cease-fire that had markets shift into broad risk-on mode, and euro bulls stepping back on to the scene.  The euro is finding a bid against the non-comdoll major currencies as the commodity currencies are back into rally mode thanks to the shift in risk sentiment:

EUR/USD is up 15 pips (+0.12%) to 1.3147, AUD/USD is up 56 pips (+0.61%) to .9329, and EUR/GBP is up 11 pips (+0.14%) to .7983

The Aussie Dollar is the biggest mover on the session, continuing its rally from Asia after Australia posted better-than-expected GDP numbers and as we saw a rise in services PMI data from China as well:

AUD/JPY is up 53 pips (+0.55%) to 97.99, AUD/NZD is up 62 pips (+0.56%) to 1.1212, and AUD/CHF is up 48 pips (+0.56%) to .8570

The  forex calendar for the afternoon U.K./morning U.S. session has only a few releases, but they are mid and top tier events that could spark volatility and new forex trading opportunities.

At 3:00 pm GMT, the U.S. will release their factory orders data to give us a read on the total value of purchase orders by manufacturers.  The expectation is for a large increase of 11% over the previous rise of 1.1%. At the same time, we’ll get the big potential market catalyst with the Bank of Canada’s decision on monetary policy.  The expectation is that they will leave the key interest rate at 1.00%.  Of course, the central bank’s outlook is as potentially market moving as any changes to policy, so pay attention to any hints of future rate hikes/cuts and how they think the economy may fair in the future.

At 7:00 pm GMT, we’ll get the U.S. Federal Reserve’s Beige Book Report, which provides us their analysis on economic conditions in each of the twelve Federal Reserve districts.  This data and analysis is used for their monetary policy decisions, so there is a potential market impact to be wary of at this time.

See also:

Asia Session Recap

U.S. Session Recap

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