London Session Forex Recap – May 21, 2015

  • French Flash Manufacturing PMI: 49.3 actual v.s. 48.5 expected, 48.0 previous
  • German Flash Manufacturing PMI: 51.4 actual v.s. 52.0 expected, 52.1 previous
  • German Flash Services PMI: 52.9 actual v.s. 53.9 expected, 54.0 previous
  • Eurozone Flash Manufacturing PMI: 52.3 actual v.s. 51.8 expected, 52.0 previous
  • Eurozone Flash Services PMI: 53.3 actual v.s. 53.9 expected, 54.1 previous
  • Eurozone Current Account: 18.6B actual v.s. 26.0B expected, 27.3B previous
  • U.K. Retail Sales m/m: 1.2% actual v.s. 0.4% expected, -0.7% previous

With economic data meant mostly for the U.K. and the euro zone, today’s morning London session saw limited volatility in most currency pairs. The pound and the euro, meanwhile, were up during the session, with the pound shooting up like a rocket thanks to better than expected retail sales data.

The euro started the session strong when French Flash manufacturing PMI posted a surprisingly better-than-expected reading, and then it got blitzed by dismal German PMI data, limiting its gains for the session. But the euro bulls seemed to be very determined since the euro managed to hold onto its gains despite being pressured by disappointing euro zone data and news that the ECB’s latest emergency aid offer to Greece was exceptionally modest.

EUR/USD is up by 64 pips (+0.58%) to 1.1163, EUR/JPY is up by 68 pips (+0.51%) to 135.06, EUR/AUD is up by 92 pips (+0.65%) to 1.4141

The pound, meanwhile, unleashed a severe pounding on the other currencies after being their doormat for most of the week. The sudden surge in strength is probably due to better-than-expected U.K. retail sales which implied an increase in consumer spending. This surprising reading is even more significant if you consider the BoE’s optimistic outlook for the economy and BoE Governor Carney’s recent statement that lower inflation is not necessarily bad or deflationary.

GBP/USD is up by 160 pips (+1.03%) to 1.5685, GBP/JPY is up by 185 pips (+0.98%) to 189.78, GBP/NZD is up by 222 pips (+1.05%) to 2.1425

The forex calendar for the upcoming afternoon London/morning U.S. session promises more volatility for the Greenback with many top-tier and mid-tier U.S. data on tap.

The session will start with a bang (or not) with the release of U.S. jobless claims (270K expected, 264K previous) at 1:30 pm GMT. This data point is worth watching because it is expected to post a higher read, which is bad because it means more people are filing for unemployment insurance.

Next, at 2:45 pm GMT, forex traders will get the U.S. Flash manufacturing PMI (54.5 expected, 54.1 previous). A reading above 50.0 is considered good, but in this case, the reading is expected to increase, indicating industry expansion which is even better.

After that, we’ll get a barrage of data at 3:00 pm GMT: U.S. existing home sales (5.23M expected, 5.19M previous), Philadelphia Fed manufacturing survey (8.0 expected, 7.5 previous), U.S. CB leading indicators m/m (0.3% expected, 0.2% previous), U.S. Flash consumer sentiment (-4.8 expected, -4.6 previous).

The most likely market movers are likely to come from either the existing home sales and the Philadelphia Fed manufacturing survey data. The former is usually seen as a leading indicator for the housing market while the latter is a survey of about 250 manufacturers within the district of the Philadelphia Federal Reserve with regard to the overall business and economic conditions. Both are expected to show improvements, so watch out if the actual data fails to meet or exceeds expectations.

Finally, forex traders will be treated to a bonus round at 6:30 pm GMT, with ECB President Mario Draghi’s and Fed Governor Stanley Fischer’s respective speeches at the ECB Forum on Central Banking in Portugal.  The speeches will be delivered during the opening reception and dinner of this multi-day event, and likely not to reveal any new juicy tidbits or hints on future monetary policy changes, but you never know. While a low probability, if they do give us something new, it’ll most likely be a short-term market moving event. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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