London Session Forex Recap – July 24, 2015

  • French Flash Services PMI: 52.0 actual v.s. 53.8 expected, 54.1 previous
  • French Flash Manufacturing PMI: 49.6 actual v.s. 50.8 expected, 50.7 previous
  • German Flash Services PMI: 53.7 actual v.s. 54.0 expected, 53.8 previous
  • German Flash Manufacturing PMI: 51.5 actual v.s. 51.9 expected, 51.3 previous
  • Euro Zone Flash Services PMI: 53.8 actual v.s. 54.2 expected, 54.4 previous
  • Euro Zone Flash Composite PMI: 53.7 actual v.s. 54.0 expected, 54.2 previous
  • Euro Zone Flash Manufacturing PMI: 52.2 actual v.s. 52.5 expected, 52.5 previous
  • U.K. BBA Mortgage Approvals: 44.89K actual v.s. 43.00K expected, 42.59K previous

Loads of data, but limited volatility to show for it. Today’s morning London forex session saw currency pairs happily ranging about, with the euro and the Loonie being the only noticeable movers.

The euro started the session by taking a dive as soon as worse-than-expected French PMI readings got out, hinting at a possible economic slow down in the euro zone.

The selling then only intensified when Germany also printed disappointing PMI readings. Interestingly, the readings were still showing industry expansion, but forex traders were apparently only concerned on whether market expectations were met or not. But by the time the not-so-good readings for the entire euro zone came out, euro bears were already out of steam.

After that, the path of euro diverged, with the euro barely winning out against the high-yielders while ranging against the safe-havens. As to why the euro’s price action diverged, it’s probably safe to assume that the slightly risk-off sentiment allowed the euro to recover some of its losses from the high-yielders since the DAX was down by 0.05% to 11,506.00 while bond-buying pushed German 10-year bond yields down by 4.31% to 0.711%.

EUR/USD is down by 55 pips (-0.50%) to 1.0932, EUR/JPY is down by 48 pips (-0.36%) to 135.65

EUR/AUD is up by 8 pips (+0.06%) to 1.5055 with 1.4960 as session low, EUR/NZD is up by 7 pips (+0.04%) to 1.6666 with 1.6610 as session low

A possible reason for the euro finding some buyers was that Bank of France Governor and European Central Bank (ECB) Council Member Christian Noyer was assuring the market that the threat of a Grexit has subsided. Speaking of Greece, there weren’t really any other major updates on the Greek drama.

The Loonie was on the move too; it was moving to the downside. Aside from market sentiment, there weren’t really any major catalysts that could account for the Loonie’s weakness, but it’s possible that the Loonie was being dragged down by lower oil prices, with Brent crude oil futures down by 0.25% to $55.13 per barrel during the session.

USD/CAD is up by 61 pips (+0.47%) to 1.3085, CAD/JPY is down by 29 pips (-0.31%) to 94.79, CAD/CHF is down by 10 pips (-0.14%) to 0.7344

The forex calendar for the upcoming afternoon London/morning U.S. session is a bit on the light side.

Up first, at 2:45 pm GMT, forex traders will get the reading for U.S. flash manufacturing PMI (53.6 expected, 53.6 previous). Most forex traders and analysts focus on the PMI readings from the Institute of Supply Management (ISM), so this indicator is usually a non-mover. But since there are no other items in the docket, and the general consensus is that it will remain unchanged, then perhaps we can expect a little volatility from the Greenback should the actual reading deviates from expectations.

Finally, we’ll end the trading week with the reading for U.S. new home sales (543K expected, 546K previous) at 3:00 pm GMT. This housing indicator is expected to decline a bit, so watch out. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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