London Session Recap – Sept. 25, 2014

  • European M3 Money Supply y/y increases: 2.0% vs. 1.9% forecast, 1.8% previous
  • U.K. CBI Distributive Trades weaker: 31% vs. 33% forecast, 37% previous

The most recent themes of strong U.S. dollar, weak euro and commodities continue through the Thursday Asia session, but turned choppy through the morning London trade.

EUR/USD fell from 1.2780 to 1.2700 early in the morning London session where it found support and has traded sideways since, possibly on better-than-expected money supply news from Europe. Overall, it looks like the sentiment that the ECB’s will move towards eventually increasing easy money policies remains strong, and that it’s likely we’ll see more euro weakness.

Comdolls are getting smashed once again today, possibly still moving on the sentiment that China’s weakness will negatively affect its trading partners like Australia.  The downside momentum has slowed to a consolidation pattern during European trade, but we are seeing fresh multi-month lows being made in the AUD/USD and new 2014 lows in NZD/USD.

AUD/USD is down 74 pips (-0.86%) to .8806, NZD/USD is down 130 pips (-1.61%) to .7939

And finally, the Greenback seems to have run out of sellers because it just tore to the upside once again today.  Besides making new high’s against the comdolls, the U.S. dollar is up again against the rest of the majors as forex traders continue to place their bets the FOMC will take the U.S. out of easy money policies by the first half of 2015.

GBP/USD is down 51 pips (-0.32%) to 1.6285, USD/JPY is up 20 pips (+0.19%), and USD/CHF is up 44 pips (+0.48%) to .9498

The forex calendar for the Thursday afternoon London/morning U.S. session has a couple of data points that will most likely add more fuel to Dollar volatility.

At 1:30 pm GMT, we’ll get durable goods orders and weekly initial jobless claims data from the U.S.  Both are likely to increase volatility for the Greenback in the short-term, with the durable goods number the more closely watched of the two.  The forecast for the headline durable goods number is for a decrease to -18% vs. 22.6%, which could show that last’s month’s big positive surprise may have been an outlier.

At 1:45 pm GMT, we’ll get the U.S. Flash Services PMI for a fresh read on the services industry. This is a low tier event, so it is likely to not spark a big reaction, but it’s something to be aware of in case there is a big surprise. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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