London Session Forex Recap – Dec. 2, 2014

  • U.K. Construction PMI: 59.4 vs. 61 forecast, 61.4 previous
  • European PPI m/m: -0.4% vs. -0.3% forecast, 0.2% previous; y/y slightly higher to -1.3% vs. -1.3% forecast, -1.4% previous

One of the big stories for the morning London session continues to be in the comdolls, taking a hit on the session after this morning’s Reserve Bank of Australia monetary policy meeting.  The RBA held the main rate at 2.50% and set the expectation of no rate changes for the foreseeable future. While the reaction seems to have been initially positive, forex traders went into sell mode on the Aussie and Kiwi as the Asia session was winding down, which London took the baton and continued to sell more. Whether it’s the thought of no rate hikes in Australia or a weak read in the upcoming New Zealand dairy auction, both currencies continue to have downside momentum at this time:

AUD/USD is down 45 pips (-0.52%) to .8441, NZD/USD is down 34 pips (-0.44%) to .7821, and AUD/NZD is up 27 pips (+0.26%) to 1.0786

The tides may be changing for U.K. construction PMI data as we saw another weaker-than-expected release and a first time dip below the 60 level since November 2013.  Even though the survey still shows positive sentiment from industry managers, forex traders didn’t take to this possible shift in trend too kindly to Sterling, with exception to the Aussie and Kiwi:

GBP/USD is down 72 pips (-0.46%) to 1.5655, EUR/GBP is up 10 pips (+0.12%) to .7935, and GBP/CAD is down 22 pips (-0.11%) to 1.7795

And finally, the Greenback is on a nice broad rally since the London open, and with no direct catalyst, it could be buying on continued global economic and commodity weakness, or potentially in anticipation of this week’s monthly U.S. employment data. Whatever the case may be, the U.S. dollar looks to have the most momentum towards the upside:

USD/JPY is up 84 pips (+0.69%) to 119.20, EUR/USD is down 45 pips (-0.35%) to 1.2423, and  USD/CHF is up 45 pips (+0.47%) to .9689

The forex calendar for the Tuesday afternoon London/morning U.S. session is light on data, but there is U.S. Federal Reserve speak to be aware of this morning.

At 1:30 pm GMT, Federal Reserve Chair Janet Yellen will give the opening remarks at the 2014 College Fed Challenge in Washington DC.  It’s likely new monetary policy insights will not be revealed during this speech, but as always we should be ready whenever the Fed Chair speaks for any surprise because they can be huge market movers.

And at 3:00 pm GMT, we’ll get the U.S. construction spending data, which is forecasted to improve to 0.6% vs. -0.4% in the previous month.  This is also not likely to be a market mover, so the trends in Asia and London may continue to be the market drivers as U.S. traders begin to hit their desks and get ready to hit the buy/sell buttons.Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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