London Session Forex Recap – Oct. 2, 2015

  • Spanish Unemployment Change: 26.1K actual v.s. 17.9K expected, 21.7K previous
  • U.K. Construction PMI: 59.9 actual v.s. 57.5 expected, 57.3 previous
  • Euro Zone PPI m/m: -0.8% actual v.s. -0.6% expected, -0.2% previous
  • Euro Zone PPI y/y: -2.6% actual v.s. -2.4% expected, -2.1% previous
  • NFP report coming up

With the NFP report looming ever closer, volatility dried up during today’s morning London forex session. But that didn’t stop some currencies from moving albeit at a somewhat grinding pace.

Let’s start with the pound. The pound began to slowly but surely claw its way up shorty after Markit revealed that Britain’s construction PMI for September had a better-than-expected reading. Better yet, Markit happily noted that “the latest reading was well above the long-run survey average (54.7) and pointed to the fastest increase in output levels since February.” Of course, demand for the high-yielding pound probably got a boost from the returning risk appetite as well, which propelled the FTSE 100 up by 1.66% to 6,173.00 during the forex session.

GBP/USD is up by 5 pips (+0.04%) to 1.5154, GBP/JPY is up by 35 pips (+0.19%) to 182.15, GBP/AUD is up by 55 pips (+0.26%) to 2.1556

Most Greenback pairs were grinding higher, too. There weren’t any direct catalysts that could have stoked some demand for the Greenback, so it’s probably just pre-emptive positioning ahead of the NFP report given that the earlier ADP report managed to print a pleasantly better-than-expected net employment increase of 200K (192K expected, 186K previous), so forex traders may be anticipating a good reading for the upcoming NFP report.

USD/JPY is up by 18 pips (+0.16%) to 120.26, USD/CAD is up by 9 pips (+0.07%) to 1.3242, USD/CHF is up by 13 pips (+0.14%) to 0.9789

As for other currencies of note, we have the Kiwi and the Aussie. Most Kiwi pairs were in the green, thanks perhaps to the risk-on sentiment and European forex traders pricing-in the ANZ Commodity Prices Index’s return to positive territory. The Aussie, meanwhile, was slightly weak despite being a high-yielding comdoll like the Kiwi. It’s possible that forex traders who were convinced to load up on the Aussie during the earlier Asian forex session were taking some delicious profits off the table ahead of the NFP report.

AUD/USD is down by 18 pips (-0.26%) to 0.7027, AUD/NZD is down by 30 pips (-0.27%) to 1.0963, AUD/CAD is down by 19 pips (-0.20%) to 0.9304

NZD/CHF is up by 11 pips (+0.18%) to 0.6276, NZD/JPY is up by 16 pips (+0.21%) to 77.07, NZD/CAD is up by 9 pips (+0.11%) to 0.8488

Moving on, today’s another NFP Friday, so you probably already know that the highlight for the upcoming afternoon London/morning U.S. session’s forex calendar is gonna be the NFP report.

But just as a reminder, Uncle Sam’s jobs data will be released at around 1:30 pm GMT.  And do note that the reading non-farm payrolls is expected to increase by 201K (173K previous) while the jobless rate in the U.S. is expected to remain unchanged at 5.1%. Also, the average hourly earnings is expected to only increase by 0.2%, which is lower than the 0.3% increase from the previous month. And if you haven’t already, make sure to read up on Forex Gump’s Forex Trading Guide for the NFP report.

Other than Uncle Sam’s jobs data, forex traders will also be getting the reading for factory orders in August (-1.2% expected, 0.4% previous) at 3:00 pm GMT. Do note that it is expected to deteriorate significantly, so it could potentially dampen demand for the Greenback.

Also, we’ll be getting a central banker bonus round since Federal Reserve Governor Stanley Fischer is scheduled to deliver a speech in Boston at around 6:30 pm GMT. Y’all know what to do: keep an ear out for any juicy updates and shifts on sentiment while keeping an eye on the Greenback. You can get the text of his speech here when it finally comes out. Have a good weekend and stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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