London Session Forex Recap – Oct. 3, 2014

  • European Services PMI: 52.4 vs. 52.8 forecast/previous
  • European Composite PMI: 52 vs. 52.3 forecast/previous
  • U.K. Services PMI: 58.7 vs. 59 forecast, 60.5 previous
  • European Retail Trade: 1.2% vs. 0.1% forecast, -0.4% previous

We saw more weak PMI data releases continue to come out in the morning London session with both European and U.K. PMI reads coming in below forecasts and previous reads. German Services was the lone bright sport among PMI data (55.7 vs. 55.4 forecast/previous), and we did see positive retail trade Europe to help slow down the flood of euro selling.  Both the euro and the pound are down since the London open, but momentum has slowed at the moment:

EUR/USD is down 50 pips (-0.40%) to 1.2615, GBP/USD is down 70 pips (-0.45%) to 1.6070, and EUR/GBP is nearly unchanged, up only 3 pips to .7874 for the session

A big part of the weakness in most currencies is a broad rally in the Greenback this morning, finding a bid against the majors ahead of the highly anticipated monthly U.S. jobs report later today at 1:30 pm GMT.  The forecast is for a 210K net add to the U.S job market, significantly higher than the previous, and very disappointing, 142K read. U.S. dollar buying kicked off right at the European open, but has slowed down as we approach the main event of the day.

USD/JPY is up 56 pips (+0.23%) to 108.96, USD/CHF is up 44 pips (+0.46%) to .9582, and NZD/USD is down 42 pips (-0.52%) to .7859

And finally, the Aussie is seeing weakness across the board, possibly feeling the effects of a tick lower in the Chinese Non-Manufacturing PMI number (54.0 vs. 54.4 previous) and/or a Morgan Stanley analyst call for AUD/USD to hit .8400 before the end of the year.  The downside momentum since the London open has been strong, erasing Asia session gains and continues into the U.S. session:

AUD/USD is down 49 pips (-0.56%) to .8751, AUD/JPY is down 6 pips (-0.03%) to 95.35, and AUD/CAD is down 31 pips (-0.32%) to .9787

Besides the big U.S. NFP report mentioned earlier, the forex calendar for the final trading session of the week is pretty stacked with data from the U.S. and Canada.

Along with U.S. Non-Farm Payrolls at 1:30 pm GMT, we’ll get Canadian merchandise trade data (1.6B CAD forecast vs. 2.58B CAD previous), U.S. trade balance data, and a slew of other U.S. employment related data points like the unemployment rate.  It’ll all be about the NFP release at this time, but important things to watch are for a change in the unemployment rate (forecast to hold at 6.1%) and for any revisions to prior NFP–especially the surprisingly low August read of 142K.

To close out the week, we’ll get the U.S. ISM non-manufacturing PMI data, forecast to tick lower to 58.5 vs. 59.6.  A lower read would be out of character with the trend higher, so this may have a strong, short-term reaction for the Greenback, especially as trader square away position ahead of the weekend.  It should all be pretty exciting and potentially volatile, so trade safe and stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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  • ForExchange

    Hi PipDiddy,

    I guess you are also tired on Friday afternoon.

    At least I guess that is why you have written “Europen Retail Trade” instead of European Retail Sales. It sounds great though! You have invented something new 🙂

    Have a nice weekend,

    FE