London Session Forex Recap – Mar. 24, 2015

  • German Flash Manufacturing PMI: 52.4 vs. 51.5 forecast, 51.1 previous
  • German Flash Services PMI: 55.3 vs. 53.9 forecast, 54.7 previous
  • European Flash Manufacturing PMI: 51.9 vs. 51.5 forecast, 51 previous
  • European Flash Services PMI: 54.3  vs. 53.9 forecast, 53.7 previous
  • U.K. CPI m/m: 0.3% vs. 0.3% forecast, -0.9% previous; y/y at 0.0% vs. 0.1% forecast, 0.3% previous

The euro gets a little bit of loving in the morning London forex session thanks to survey results freshly printed and showing that purchasing manager’s sentiment is mostly improving in the euro zone.  The only laggard continues to be from French purchasing managers, still sending contractionary vibes on the manufacturing sector.  Overall, the good data trend continues in the euro zone, prompting broad euro strength which seems to be pulling back at the moment:

EUR/USD is up 30 pips (+0.28%) to 1.0974, EUR/JPY is up 5 pips (+0.03%) to 131.02, and EUR/GBP is up 43 pips (+0.59%) to .7361

On the other hand, Sterling bulls are taking a beating on the session due to fresh news that the yearly consumer price index fell to zero!  Thanks to falling oil and food prices, the U.K. moves closer to the dreaded deflation scenario, something BOE Mark Carney mentioned earlier in the year may happen before inflation turns higher.  Of course, we’ll have to see if inflation turns around then, but for now, Sterling is being sold across the board with momentum still strongly in favor of the bears:

GBP/USD is down 45 pips (-0.31%) to 1.4903, GBP/JPY is down 108 pips (-0.61%) to 177.89, and GBP/CHF is down 183 pips (-1.28%) to 1.4260

The forex calendar for the Tuesday afternoon London/morning U.S. session is no slouch itself as we’ll see U.S. data ranging from housing to inflation to hopefully keep forex volatility up, especially in the already active, and falling Greenback.

At 12:30 pm GMT, we’ll get the main market mover of the U.S. session with the latest read on consumer price inflation in the U.S. The headline monthly CPI number is forecasted to come in higher at 0.2% vs. -0.7% previous, while the core number is forecasted to tick lower to 0.1% vs. 0.2% previous. Inflation is one of the main considerations by any central bank in guiding monetary policy, so this number is likely to have an affect on the Greenback, especially if it breaks the downward trend in global inflation.

The rest of the U.S. data will slowly trickle in throughout the final hours of the London session, starting at 1:00 pm GMT with the FHFA house price index (0.6% forecast vs. 0.8% previous), then flash manufacturing PMI at 1:45 pm GMT (54.6 forecast vs. 55.1 previous).  It’ll all close out with the U.S. monthly new home sales number at 2:00 pm GMT, forecasted to come in lower than previous (467K vs. 481K).  The housing data is likely to be the market movers, but since the focus has been on inflation as of late, they’ll have to be big surprises to take away focus from today’s inflation data. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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