London Session Forex Recap – Feb. 2, 2015

  • Swiss Manufacturing PMI: 48.2 vs. 53.6 previous
  • French Manufacturing PMI: 49.2 vs. 49.5 forecast/previous
  • German Manufacturing PMI: 50.9 vs. 51 forecast/previous
  • European Manufacturing PMI inline with 51 forecast/previous
  • U.K. CIPS/Market Manufacturing PMI: 53 vs. 52.7 forecast/previous

The euro zone and the U.K. showed improvement in another round of global manufacturing PMI data releases during the London session. The reactions were quite volatile and surprising as the euro rallied higher on mostly a positive mix of reads from around Europe, while the British pound went into bear mode after the initial spike higher on its manufacturing data.

The euro’s strength may be a reaction to rumors of the Swiss National Bank intervening in the currency markets to get EUR/CHF into an informal trading band, possibly between 1.05 – 1.10.  This could explain the broad weakness in Sterling, likely off of EUR/GBP strength:

EUR/USD is up 28 pips (+0.25%) to 1.1306, EUR/JPY is up 51 pips (+0.39%) to 133.02, and EUR/GBP is up 34 pips (+0.45%) to .7523

The Canadian dollar is finding strength on the session, likely on the surge in oil prices early in the trading week with Brent crude hitting $55/barrel this morning, up from the $44/barrel lows from last week.

USD/CAD is down 39 pips (-0.31%) to 1.2682, EUR/CAD is down 17 pips (-0.13%) to 1.4338, CAD/JPY is up 54 pips (+0.58%) to 92.72

The forex calendar for the Monday afternoon London/morning U.S. session is heavy with a broad range of U.S. economic data points.

At 1:30 pm GMT, we’ll get U.S. personal income and spending data, as well as a read on the U.S. core PCE price index. These are both mid-tier events so there may not be a big reaction on the release, but the event to definitely pay attention to is the core PCE number (0.0% forecast vs. 0.0% previous), which is a read on inflation by individuals and the preferred inflation gauge by the Federal Reserve.

We’ll then start to close out the Monday economic calendar at 2:45 pm GMT with the U.S. read on manufacturing PMI, and then the construction spending and ISM manufacturing index at 3:00 pm GMT. The Institute of Supply Management (ISM) manufacturing index number (54.5 forecast vs. 55.1 previous) tends to be the market mover of the group, and while it has seen more upside surprises in recent past, it has been on a downward trend since hitting a high of 59.0 in September and November of 2014.  Another down number could spark more volatility for an already volatile session for the Greenback. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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