London Session Forex Recap – May 4, 2015

  • Swiss Manufacturing PMI: 47.9 vs. 48.3 forecast, 47.9 previous
  • German Manufacturing PMI: 52.1 vs. 51.9 forecast/previous
  • European Manufacturing PMI: 52.0 vs. 51.9 forecast/previous
  • European Sentix Indicator: 19.6 vs. 19.3 forecast, 20 previous
  • U.K. Banks Close for May Day Holiday

Even with U.K. forex traders out for the May Day holiday, there was plenty of action thanks to euro zone manufacturing PMI data. The results for last month’s reads came in mixed, but the reaction in the euro seems to imply that the focus is on the weaker-than-expected reads (Spain and France) or even a tick lower in the Sentix investor confidence data rather the overall improvements, including a strong number from Germany. The newswires seem to be lacking in any new, major negative developments from Greece, so whatever the direct catalyst may be for euro weakness, it’s having a strong affect by pushing the shared currency broadly lower against the majors:

EUR/USD is down 56 pips (-0.50%) to 1.1136, EUR/JPY is down 58 pips (-0.44%) to 133.90, and EUR/GBP is down 20 pips (-0.28%) to .7365

The other move of note in the morning London forex session is the Canadian dollar, moving higher on the session and likely picked up by today’s rally in Brent crude oil.  The oil market hit 2015 highs around $67/barrel, most likely on the expectation that the excess oil supply will ease on potential Chinese stimulus measures. Because Canada’s economy does rely heavily on their oil export market, the Loonie tends to move in step with oil prices, and it’s definitely following the oil market higher as it gains across the board with the wind still at its back going into U.S. trade:

EUR/CAD is down 127 pips (-0.94%) to 1.3488, USD/CAD is down 46 pips (-0.38%) to 1.2109, and CAD/CHF is up 64 pips (+0.85%) to .7720

The rest of the market is in chop mode with exception to the Greenback.  The U.S. dollar is slightly higher on the session, possibly on short-term profit taking after taking losses going into the end of April or forex traders sidelining ahead of the monster U.S. jobs report on Friday:

AUD/USD is down 14 pips (-0.19%) to .7824, GBP/USD is down 29 pips (-0.19%) to 1.5104, and USD/JPY is up 10 pips (+0.09%) to 120.26

The forex calendar for the Monday afternoon London/morning U.S. session is starting what will be an extremely busy week with only U.S. factory orders data today.  At 3:00 pm GMT, we’ll get the latest monthly change on new purchases by manufacturers, and it’s considered a leading indicator for productivity as a rise in purchases tends to mean more demand from the consumer sector.

The forecast is for a strong rise to 2.1% vs. 0.2% previous, which was the first positive read we’ve seen September 2014.  Will it be another sign of recovery and will it move the markets? Again, with a busy calendar ahead, it’s likely we won’t see too many traders making moves on this data point.

Also of note is FOMC member Charles Evans speaking on the economy and monetary policy at the Columbus Economic Development Board annual meeting. While this event is not likely to provide new insights to Fed policy or their outlook on the economy since last week’s meeting, Charles Evans is a voting member and any surprises could spark short-term volatility for the markets, especially the U.S. dollar. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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