London Session Forex Recap – Nov. 2, 2015

  • Swiss retail sales: 0.2% vs. 0.0% expected, -0.3% previous
  • Swiss manufacturing PMI: 50.7 vs. 50.2 expected, 49.5 previous
  • French manufacturing PMI: 50.6 vs. 50.7 expected, 50.7 previous
  • German manufacturing PMI: 52.1 vs. 51.6 expected, 51.6 previous
  • Euro Zone final manufacturing PMI: 52.3 vs. 52.0 expected, 52.0 previous
  • UK manufacturing PMI: 55.5 vs. 51.2 expected, 51.8 previous
  • US manufacturing PMI readings from Markit and ISM coming up

Ho-hum. Today’s morning London forex session was rather slow, with most currency pairs happily milling about in tight ranges or showing some volatility but little direction. The only real movers during the session were the explosive pound and the slow-yet-steady Kiwi.

The pound had a noticeable volatility infusion shortly before and after the UK reported a significantly better-than-expected reading for October’s manufacturing PMI, which also happens to be at a 16-month high. And the previous reading was upgraded from 51.5 to 51.8 to boot. Blimey!

A look at the details of the report yielded even better news since factory output growth recorded “its best month of output growth since June 2014, stepping out of the subdued trend.” The report also noted that the domestic market was still the prime source of demand, but “back-to-back increase in new export business were signaled for the first time since the third quarter of 2014.”

Overall, it supports the monetary policy divergence and the market’s belief that the BOE tends to follow the US Fed’s action that I highlighted in last week’s Top Forex Market Movers of the Week. Hmm. Did that sound kinda redundant to you? Oh, well!

GBP/USD is up by 45 pips (+0.30%) to 1.5476, GBP/JPY is up by 86 pips (+0.47%) to 186.68, GBP/CAD is up by 110 pips (+0.55%) to 2.0287

As for the Kiwi, there weren’t any direct catalysts that could account for the Kiwi’s weakness during the forex session, but it could have been due to pre-emptive positioning (or Kiwi bulls unwinding their positions) ahead of tomorrow’s diary auction and/or New Zealand’s jobs report, especially since the jobless rate is expected to tick a bit higher.

NZD/USD is down by 30 pips (-0.46%) to 0.6735, NZD/CHF is down by 25 pips (-0.38%) to 0.6650, NZD/JPY is down by 23 pips (-0.29%) to 81.25

The forex calendar for the upcoming afternoon London/morning US session has got another PMI data dump in store for us, so y’all better get ready.

We’ll start at 2:30 pm GMT with Canada’s manufacturing PMI (48.5 expected, 48.6 previous) courtesy of the Royal Bank of Canada. Do note that a downtick is expected, so keep an eye on the Loonie, especially if a surprise reading comes along.

After that, at 2:45 pm GMT, forex traders will be getting Markit’s final reading for US manufacturing PMI (54.1 expected, 54.0 previous). The consensus is that the final reading will be slightly revised upwards.

Still, a major market reaction is not expected since forex traders usually focus on the Institute for Supply Management’s (ISM) manufacturing PMI reading (50.0 expected, 50.2 previous), which comes out a little later at 3:00 pm GMT. Do note that Markit’s reading and the ISM’s reading are at odds with each other since ISM is expected to show that the US manufacturing sector stagnated.

Also at 3:00 pm GMT, we’ll get ISM’s US manufacturing prices (39.5 expected, 38.0 previous) and the US Census Bureau’s construction spending (0.5% expected, 0.7% previous). These are considered low-tier items, though, so they likely won’t have an impact on the Greenback’s price action.

Finally, we’ll get a central banker bonus round at 5:00 pm GMT when FOMC Member John Williams delivers a speech at the San Francisco Federal Reserve. Y’all know the drill, guys: keep an ear out for juicy updates on the future direction of monetary policy and/or shifts in economic outlook. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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