London Session Recap – Sept. 23, 2014

  • French Flash Services PMI weaker: 49.4 vs. 50.1 forecast, previous 50.3; Flash Manufacturing PMI improves: 48.8 vs. 47 forecast, 46.9 previous
  • German Flash Services PMI improves: 55.4 vs. 54.6 forecast, 54.9 previous; Flash Manufacturing PMI declines: 50.3 vs. 51.2 forecast, 51.4 previous
  • U.K. Public Borrowing (PSNB ex. interventions) rises: 12.5B GBP vs. 11.8B GBP forecast, 400M GBP previous
  • U.K. BBA Mortgage Approvals declines: 41.59K vs. 42.91K forecast, 42.72 previous

The main driver of currency price action this morning was news of U.S. and Arab allies beginning bombing operations, targeting ISIS terrorists in Syria. This sparked profit taking and risk aversion moves by forex traders, like a euro rally despite flash PMI data coming in mostly weaker-than-expected from across Europe.  Particularly, EUR/USD saw a nice rally as traders lightened up on the recent euro selloff and recent strength in the Greenback: EUR/USD is up 46 pips (+0.36%) to 1.2892

As usual, the big mover when geopolitical risk rises is the Japanese yen.  The yen tends to benefit as traders take risk off of the table, needing to buy back the short yen positions used to fund higher risk trades. Although, this time it looks like the yen rally was short lived as the drop in yen pairs today was quickly faded and reversed during the morning London session.  USD/JPY dropped from around 108.80 prints during the Asia session to about 108.25 before buyers took back control, but the bounce looks like it has run out of steam at the moment.

And the Aussie and Kiwi are taking small hits today on the risk aversion flows, despite better-than-expected Chinese manufacturing PMI data to hopefully slow down the weakness in commodities and commodity currencies we’ve seen as of late.

NZD/CHF is down 35 pips (-0.47%) to .7593, NZD/JPY is down 33 pips (-0.38%) to 88.01, and EUR/NZD is up 78 pips (+0.50%) to 1.5889

The forex calendar for the Tuesday afternoon London/morning U.S. session has a mix of economic data from the U.S. and Canada to mix things up in the currency markets.

At 1:30 pm GMT, we’ll get a read on Canada’s consumer sector in the form of retail sales data.  This data point has been on an upswing in the past few months, and with recent Canadian data coming out better-than-expected, we may see another surprise to the lower-than-previous forecast of 0.5% vs. 1.15 previous on the headline number.

At 2:00 pm GMT, we’ll get a read on U.S. housing in the form of FHFA House Price index (0.5% forecast vs. 0.4% previous), and the U.S.’s own flash manufacturing PMI data (58 forecast vs. 57.9 previous). These are low to mid tier events, so unless we see big surprises, the focus may remain on geopolitical news developments coming from the Middle East.  Stay frosty!

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!