London Session Forex Recap – September 1, 2015

  • Swiss Manuf. PMI: 52.2 actual v.s. 49.8 expected, 48.7 previous
  • French Manuf. PMI: 48.3 actual v.s. 48.6 expected, 48.6 previous
  • German Manuf. PMI: 53.3 actual v.s. 53.2 expected, 53.2 previous
  • German Jobless Rate: unchanged at 6.4% as expected
  • Euro Zone Manuf. PMI: 52.3 actual v.s. 52.4 expected, 52.4 previous
  • Euro Zone Jobless Rate: 10.9% actual v.s. 11.1% expected, 11.1% previous
  • U.K. Manuf. PMI: 51.5 actual v.s. 52.0 expected, 51.9 previous
  • Canadian GDP on tap
  • ISM Manuf. PMI coming up

It was all about China’s woes again during today’s morning London forex session, as the wave of risk aversion drowned European equities in a sea of red, with the DAX down by 2.32% to 10,022.50 during the forex session. But how did the forex market react?

Well, as usual, forex traders dumped the higher-yielding currencies in favor of the so-called safe-haven currencies. Let me give y’all a brief rundown.

Let’s start with the high-yielding comdolls, which got dragged down as fears of a slowdown in China stoked fears of lower demand for commodities, sending commodity prices lower before and during the forex session.

Both the Aussie and the Kiwi were hit hard due to their respective economies’ trade relations with China. As for the Loonie, it also started the forex session weak, but managed to find some strength during the course of the session despite another round of slumping oil prices, with Brent crude oil down by 2.45% to $52.83 per barrel during the session. There were no direct catalysts for the sudden turnaround, but it’s possible that that some forex traders were opening pre-emptive positions ahead of Canada’s GDP reading.

AUD/USD is down by 39 pips (-0.55%) to 0.7070, AUD/CHF is down by 20 pips (-0.29%) to 0.6804, AUD/CAD is down by 45 pips (-0.49%) to 0.9309

NZD/USD is down by 35 pips (-0.56%) to 0.6343, NZD/CHF is down by 26 pips (-0.43%) to 0.6097, NZD/CAD is down by 56 pips (-0.67%) to 0.8341

USD/CAD is up by 13 pips (+0.10%) to 1.3173 with 1.3233 as session high, CAD/JPY is down by 51 pips (-0.57%) to 91.01 with 90.38 as session low, CAD/CHF is up by 14 pips (+0.20%) to 0.7306 with 0.7236 as session low

As a high-yielding currency, the pound got whacked too. And it certainly also didn’t help that the manufacturing PMI reading for the U.K. failed to meet the market’s expectations, and even hinted that hiring during August “turned mildly negative.” On a more upbeat note, the pound was able to somehow win out against the Aussie and the Kiwi.

GBP/USD is down by 47 pips (-0.30%) to 1.5350, GBP/JPY is down by 151 pips (-0.81%) to 184.05, GBP/AUD is up by 56 pips (+0.26%) to 2.1717

As for the euro, well, it had a mixed performance. Poor performance from the DAX and other euro zone stock markets apparently didn’t send the euro on a broad selloff. And from the looks of it, it seems like the euro was being pushed around by opposing currency price action, which is understandle since the data points that came out during the forex session were mixed and there weren’t any major news reports.

EUR/USD is down by 25 pips (-0.22%) to 1.1256, EUR/JPY is down by 102 pips (-0.76%) to 134.94, EUR/AUD is up by 65 pips (+0.41%) to 1.5934

Normally, Europea forex traders flee to the Swissy’s sweet embrace during periods of uncertainty. Today was different, though, since most European forex traders decided to run to the Japanese yen instead. This preference for the yen as the safe-haven currency of choice seems to be gaining ground among forex traders, as revealed by Forex Ninja’s latest espipionage mission.

USD/JPY is down by 67 pips (-0.56%) to 119.83, NZD/JPY is down by 92 pips (-1.20%) to 75.95, AUD/JPY is down by 95 pips (-1.11%) to 84.72

The forex calendar for the upcoming afternoon London/morning U.S. session has a lot of items on top, so let’s dive right into it.

We’ll start the forex session on a heavy note at 1:30 pm GMT, with the reading for Canada’s GDP (0.2% expected, -0.2% previous). The reading is expected to print an improvement, but as I noted earlier, the Loonie managed to see some strength, so if the actual reading comes in as expected, then we may see some forex traders unwinding their positions. A better-than-expected reading may convince more buyers to load up on the Loonie, though.

Next, at 2:45 pm GMT, we’ll get the final reading for Markit’s U.S. manufacturing PMI (52.9 expected, 52.9 previous). Do note that no revision is expected, so a better or worse-than-expected reading may potentially cause a reaction, although that is highly unlikely since the reading for ISM’s manufacturing PMI (52.6 expected, 52.7 previous) is expected to come out shortly after, at 3:00 pm GMT. Do note that ISM’s manufacturing PMI is expected to post a slight decrease, so watch out for that.

Also at 3:00 pm GMT, forex traders will get the readings for construction spending (0.6% expected, 0.1% previous) in the U.S. as well as IBD’s consumer optimism (47.1 expected, 46.9 previous). They’re considered lower-tier items, though, and most forex traders would be probably be keeping an eye on ISM’s PMI reading.

Oh, a dairy auction is also currently underway, so keep an eye on that since it may potentially cause the Kiwi to react. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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