London Session Forex Recap – Oct. 1, 2015

  • Swiss Retail Sales: -0.3% actual v.s. 0.3% expected, 0.1% previous
  • Swiss Manufacturing PMI: 49.5 actual v.s. 51.9 expected, 52.2 previous
  • Spanish Manufacturing PMI: 51.7 actual v.s. 53.0 expected, 53.2 previous
  • French Manufacturing PMI: 50.6 actual v.s. 50.4 expected, 50.4 previous
  • German Manufacturing PMI: 52.3 actual v.s. 52.5 expected, 52.5 previous
  • Euro Zone Manufacturing PMI: unchanged at 52.0 as expected
  • U.K. Manufacturing PMI: 51.5 actual v.s. 51.3 expected, 51.6 previous
  • Uncle Sam’s ISM manufacturing PMI coming up

Compared with the earlier Asian session, today’s morning London forex session was relatively subdued in terms of directional movement. The only clear exceptions were the Kiwi and the Swissy, although the Japanese yen later joined the party as well.

The safe-haven Swissy extended its losses from the earlier sessions despite the return of risk aversion, with the DAX down by 0.40% to 9,622.30 during the forex session. The lack of demand for the Swissy was probably due to the poor readings for Swiss retail sales and manufacturing PMI, which both paint a gloomier picture of the current state of the Swiss economy.

USD/CHF is up by 16 pips (+0.17%) to 0.9784, AUD/CHF is up by 17 pips (+0.24%) to 0.6915, GBP/CHF is up by 34 pips (+0.23%) to 1.4806

Moving on, the yen was well-behaved for the most part after getting dumped during the Asian trading session, with most yen pairs imprisoned in tight ranges. That changed, however, when risk aversion began to spread during the European session, causing forex traders to flee to the safe-haven yen. There were also reports that the Bank of Japan (BOJ) will not be introducing more easing measures, after a string of poor economic data caused some market analysts to forecast more stimulus from the BOJ yesterday.

USD/JPY is down by 49 pips (-0.32%) to 119.74, GBP/JPY is down by 43 pips (-0.24%) to 181.24, EUR/JPY is down by 28 pips (-0.21%) to 133.57

As for the Kiwi, it was surging ever higher throughout the course of the forex session. There weren’t any direct catalysts that could account for the strength, and the prevailing risk-off sentiment should have discouraged forex traders from loading up on the high-yielding Kiwi. Some analysts pointed to higher milk prices while other analysts were citing end-of-quarter flows or positioning. Other analysts, however, were pointing to higher dairy futures prices due to lower supplies of milk. Well, whatever the case may truly be, the fact remains that the Kiwi was the strongest currency during the forex session.

NZD/USD is up by 33 pips (+0.53%) to 0.6440, NZD/CAD is up by 39 pips (+0.46%) to 0.8548, NZD/CHF is up by 42 pips (+0.65%) to 0.6298

The forex calendar for the upcoming afternoon London/morning U.S. session has a lot of low-tier items on tap, but we’ll also be getting a few mid-tier and high-tier items, so I’ll be focusing only the more important ones.

Up first, at 1:30 pm GMT, we’ll get the readinf for U.S. initial claims (271K expected, 267K previous). Do note that its expected to rise, which means more people are filing for unemployment insurance, which is a bad thing.

Next, at 2:45 pm GMT, we’ll get Markit’s final reading for U.S. manufacturing PMI (53.0 expected, 53.0 previous). Do note that no revisions are expected, so a surprise revision may cause a reaction from the Greenback.

There’s a good chance that the market will not react at all, though, since forex traders will probably have their sights on the Institute for Supply Management’s (ISM) manufacturing PMI reading (50.6 actual v.s. 51.1 previous), which is scheduled for release at 3:00 pm GMT. Do note that ISM’s manufacturing PMI reading is expected to show a deterioration, but it will still be above the 50.0 neutral mark.

We also got a couple of central banker speakers lined up. Up first, at 5:00 pm GMT, SNB Governing Board Member Fritz Zurbrugg will deliver a speech in Zurich. Then, at around, 7:30 pm GMT, Federal Reserve Bank of San Francisco President John Williams will talk about his economic outlook at Salt Lake city. Make sure to keep an ear out for any major updates or shifts in economic outlook, alright? Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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