London Session Forex Recap – August 3, 2015

  • Swiss Manufacturing PMI: 48.7 actual v.s. 50.6 expectedm 50.0 previous
  • Spanish Manufacturing PCE: 53.6 actual v.s. 54.2 expected, 54.5 previous
  • French Manufacturing PMI: unchanged at 49.6 as expected
  • German Manufacturing PMI: 51.8 actual v.s. 51.5 expected, 51.5 previous
  • Euro Zone Manufacturing PMI: 52.4 actual v.s. 52.2 expected, 52.2 previous
  • U.K. Manufacturing PMI: 51.9 actual v.s. 51.5 expected, 51.4 previous
  • Most of Canada away for Civic Holiday
  • U.S. ISM Manufacturing PMI coming up

Like in the earlier Asian session, peace and tranquillity ruled over today’s morning London forex session, with most currency pairs contently milling about in tight ranges. As usual, there were a few rebellious currencies.

The first rebel on the line up is the Aussie. There weren’t any direct catalysts, but the Aussie was bleeding out for most of the forex session. And Looking at the commodities, gold was down by 0.39% to $1,090.80 per troy ounce, which isn’t exactly wonderful news for a major gold digger, uh, I meant gold producer like Australia. It’s also possible that European traders were pricing-in the poor result for ANZ’s job advertisement series (-0.4% actual v.s. 1.2% previous) as well as the dismal Chinese manufacturing PMI (47.8 actual v.s. 48.2 previous) from earlier, which promises even less demand for Australian iron ores.

AUD/USD is down by 33 pips (-0.46%) to 0.7264, AUD/JPY is down by 23 pips (-0.26%) to 90.27, AUD/NZD is down by 43 pips (-0.39%) to 1.1021

The next rebel on the line up is the pound. The pound was also weak for most of the forex session, even though its manufacturing PMI managed to beat both the previous reading and the market’s expectations. But a quick scan of Markit’s manufacturing PMI report shows that Rob Donson, Markit’s senior economist, held the opinion that “growth remains near-stagnant and suggests that the sector is continuing to act as a drag on the economy.” He also stated that the strong pound “is still sapping export demand and constraining growth of total order inflows.” Overall, future prospects for the U.K. ain’t too bright, especially with the strong pound, which is probably why forex traders sold it off.

GBP/USD is down by 72 pips (-0.47%) to 1.5566, GBP/NZD is down by 95 pips (-0.41%) to 2.3616, GBP/JPY is down by 51 pips (-0.26%) to 193.46

The euro is also worth mentioning because it failed to move higher despite being blessed with a bunch of mostly better-than-expected manufacturing PMI readings. Risk sentiment and inter-market relationships should have created demand for the euro too since the DAX was up by 0.96% to 11,417.30 and bond-selling widened the German 10-year bond yields by 2.01% to 0.660% for the forex session. It may be a bit of a stretch, but perhaps the euro bulls were kept in check by the Greek stock market sell-off since there weren’t really any major catalysts during the forex session.

EUR/USD is down by 48 pips (-0.44%) to 1.0943, EUR/JPY is down by 33 pips (-0.25%) to 136.00, EUR/CHF is down by 9 pips (-0.09%) to 1.0597

We’ve got a whole slew of U.S. economic data for the upcoming afternoon London/morning U.S. session’s forex calendar.

At 1:30 pm GMT, forex traders will get a U.S. economic data dump with the release of the readings for U.S. Core PCE price index (0.1% expected, 0.1% previous), U.S. personal income (0.3% expected, 0.5% previous), and U.S. personal spending (0.2% expected, 0.9% previous). Personal income and personal spending are both consumption indicators and they’re both expected to decline, so watch it. The core PCE reading, meanwhile, is a gauge for inflation and it is expected to increase at the same rate as the previous reading, so an actual reading below or above that may cause some volatility among Greenback pairs.

Next at, 2:45 pm GMT, we’ll get the reading for Markit’s U.S. manufacturing PMI (53.8 expected, 53.8 previous). Most forex traders will probably focus on the ISM’s manufacturing PMI (53.5 expected, 53.5 previous), though, which will come out at 3:00 pm GMT together with the reading for U.S. construction spending (0.6% expected, 0.8% previous). In any case, both PMI readings from Markit and the ISM are expected to remain unchanged, so deviation from market expectations would likely cause the Greenback to make some moves.

Finally, we’ll get a bonus round with Federal Reserve Governor Jerome Powell’s speech in Washington at around 3:50 pm GMT. Make sure to keep an ear out for any juicy updates or shifts in sentiment. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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