London Session Forex Recap – Mar. 4, 2015

  • French Services PMI inline with 53.4 forecast/previous
  • German Services PMI: 54.7 vs. 55.5 forecast/previous
  • European Services PMI: 53.7 vs. 53.9 forecast/previous
  • U.K. Services PMI: 56.7 vs. 57.5 forecast, 57.2 previous
  • European Retail Trade m/m:  1.1% vs. 0.2% forecast, 0.4% previous

We saw the euro and British pound tank as early as the London open on weaker-than-expected services PMI data from both Europe and the U.K.  We did see a nice uptick in European retail sales data, but it looks like forex traders were bent on punching in the sell orders, also likely on the impending start of the ECB’s quantitative easing program. Many euro and pound pairs are hitting new monthly lows, especially against the comdolls who are likely benefiting on their positive interest rate differentials:

EUR/NZD is down 148 pips (-1.0%) to 1.4649, GBP/AUD is down 81 pips (-0.41%) to 1.9546, and EUR/GBP is down 15 pips (-0.22%) to .7251

Speaking of the comdolls, the New Zealand dollar is the clear winner on the session.  With no direct catalysts that I can see, it’s likely higher on the positive global sentiment risk thanks to the easy money policies from central banks around the world (with the Reserve Bank of India being the latest to cut today).

NZD/USD is up 52 pips (+0.69%) to .7593, NZD/JPY is up 48 pips (+0.53%) to 90.81, and NZD/CHF is up 71 pips (+0.99%) to .7295

We could see more volatility ahead as the forex calendar for the Wednesday afternoon London/morning U.S. session is stacked with top tier events from both the U.S. and Canada.

At 1:15 pm GMT, we’ll get the ADP Employment Survey number for a read on the private employment sector, coming in a 213K (220K forecast, 213K previous). Currency traders and economists tend to see this as a leading indicator for the monthly monster U.S. jobs number issued by the Bureau of Labor Statistics coming this Friday.

At 3:00 pm GMT, we’ll likely see big volatility for the Loonie with the latest monetary policy decision from the Bank of Canada. Forex Gump mentioned earlier this week that not much has changed since the BOC shocked the markets with a surprise rate cut and that oil prices may have stopped falling. So, no change to monetary policy is expected, but that’s the same expectation everyone had before the last BOC policy statement.

We’ll also get the ISM non-manufacturing survey data for a read on the services sector in the U.S.  This is a top tier event and seeing how the European data had the euro dropping like a rock earlier, its likely we’ll see the same volatility in the Greenback, especially if the data bucks the recent trend of declining numbers since hitting 59.3 back in December.

Finally, at 7:00 pm GMT, we’ll get the Fed Beige Book for an anecdotal summary of conditions in the U.S. This doesn’t usually draw much of a reaction from forex traders, but it will be interesting to see commentary on the affects on economic activity from falling oil prices and the extreme cold weather conditions hitting the U.S. lately. A change from “moderate” pace rhetoric may cause a short-term stir in the Greenback. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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