London Session Forex Recap – September 2, 2015

  • Spanish Unemployment Change: 21.7K actual v.s. 35.3K expected, -74.0K previous
  • U.K. Construction PMI: 57.3 actual v.s. 57.5 expected, 57.1 previous
  • Euro Zone PPI m/m: -0.1% as expected, same as previous
  • ADP’s employment report coming up

Forex price action for today’s morning London forex session was rather choppy, probably because of mixed sentiment in the markets due to the Shanghai composite index ending the day 0.37% lower while U.S. equity futures are in the green, with the S&P 500 futures up by 0.43% to 1,924.25 and the Nasdaq futures up by 0.46% to 4,177.50 during the forex session.

With the U.S. equity markets poised for a potentially green day, forex traders naturally flocked to the Greenback, although some forex traders were probably opening pre-emptive positions ahead of U.S. data for later. The Greenback wasn’t the strongest currency of the forex session, though, that distinction goes to the yen, as market uncertainty sent many forex traders running to the yen yet again. This uncertainty also sapped demand for the comdolls, which were mostly down for the forex session.

USD/CAD is up by 33 pips (+0.25%) to 1.3272, NZD/USD is down by 19 pips (-0.30%) to 0.6327, AUD/USD is down by 25 pips (-0.36%) to 0.6994

USD/JPY is down by 6 pips (-0.06%) to 119.97, CHF/JPY is down by 35 pips (-0.28%) to 124.33, NZD/JPY is down by 24 pips (-0.31%) to 75.91

Strangely enough, the Swissy was showed considerable weakness during the forex session, which is rather strange given its safe-haven status and the market uncertainty. Gold was slightly down by 0.06% to $1,139.10 per troy ounce during the session, but I don’t think that could have weakened the Swiss franc significantly. And since there were’t any economic reports or news items during the forex session, it would probably be safe to point to the usual suspect – the Swiss National Bank is weakening the Swissy again.

USD/CHF is up by 28 pips (+0.29%) to 0.9648, EUR/CHF is up by 17 pips (+0.16%) to 1.0870, GBP/CHF is up by 33 pips (+0.23%) to 1.4738

As for the pound, it had a mixed performance again. Apparently, it was being led around by opposing currency price action again. The catalysts during the forex session were mixed too since construction PMI was less-than-expected, but still expanding. And the FTSE 100 was only slightly up by 0.08% to 6,063.50 during the forex session.

GBP/USD is down by 10 pips (-0.07%) to 1.5271, GBP/JPY is down by 27 pips (-0.16%) to 183.36, GBP/NZD is up by 52 pips (+0.22%) to 2.4127

The euro ended up being led around by opposing currency price action too despite a better-than-expected reading for Spanish unemployment change and the superior performance of the euro zone equities market, with the DAX up by 0.30% to 10,046.00 during the forex session.

EUR/USD is down by 20 pips (-0.18%) to 1.1258, EUR/NZD is up by 30 pips (+0.17%) to 1.7795, EUR/JPY is down by 19 pips (-0.14%) to 135.15

The forex calendar for the upcoming afternoon London/morning U.S. session has a good mix of low-tier and mid-tier items lined up, with the ADP employment survey (200K expected, 185K previous) being the only top tier item on tap.

The ADP report is scheduled for release at around 1:15 pm GMT, and it is expected to post a nice increase. If the actual reading comes in as expected or better, then it may convince some forex traders to load up on the Greenback in anticipation of a similar reading for non-farm payrolls this Friday.

Moving on, at 1:30 pm GMT, forex traders will get the revised readings for U.S. non-farm productivity (2.9% expected, 1.3% previous) and U.S. unit labor costs (-1.2% expected, 0.5% previous). Do note that the two labor indicators are at odds with each other since the former is expected to be revised higher while the latter is expected to have a downgrade.

After that, at 3:00 pm GMT, the monthly reading for U.S. factory orders (0.9% expected, 1.8% previous) is scheduled for release, and it doesn’t look good since total value of new purchase orders is expected to contract. Make sure to keep a close eye on how the Greenback will react to this mid-tier data point, okay?

Finally, at 7:00 pm GMT, we’ll get the Federal Reserve’s Beige book. Its release doesn’t normally cause a market reaction, but perhaps we’ll finally see some clear hints on the future direction of monetary policy. In any case, if you’re interested on reading this, you can find it here. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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