London Session Forex Recap – Nov. 4, 2015

  • French services PMI: 52.7 vs. 52.3 expected, 52.3 previous
  • German services PMI: 54.5 vs. 55.2 expected, 55.2 previous
  • Euro Zone composite PMI: 53.9 vs. 54.0 expected, 54.0 previous
  • Euro Zone services PMI: 54.1 vs. 54.2 expected, 54.2 previous
  • UK services PMI: 54.9 vs. 54.5 expected, 53.3 previous
  • Euro Zone PPI m/m: -0.3% vs. -0.5% expected, -0.8% previous
  • Euro Zone PPI y/y: -3.1% vs. -3.3% expected, -2.6% previous

Price action was a bit wonky during today’s morning London forex session since the Swissy was winning out despite the prevailing risk-on sentiment while the high-yielding Kiwi and Aussie were on the retreat.

Major reports/events:

Risk appetite returnsToday’s morning London forex session was a cheerful risk-on day, with the FTSEurofirst 300 up by 1.07% to 1,510.15 during the forex session. US equity futures were slightly in the green as well, with the S&P 500 futures up by 0.10% to 2,105.00 and NASDAQ futures up by 0.20% to 4,721.38.

Euro Zone services PMI – the final reading for the entire euro zone’s services PMI was downgraded a bit from 54.2 to 54.1, but it’s still a nice improvement over the previous month’s final reading of 53.7.

Individual euro zone members also released the final reading for their services PMI. Most of them actually had upgrades, and their final readings were mostly an improvement when compared to their respective previous month’s final readings. Germany’s final services PMI reading was downgraded from 55.2 to 54.5, however, but it’s still a slight improvement over last month’s 54.1.

UK services PMI – The services PMI reading for the United Kingdom came in better-than-expected at 54.9, which is a great addition to the solid readings for both manufacturing PMI (55.5 vs. 51.3 expected, 51.8 previous) and construction PMI (58.8 vs. 58.9 expected, 59.9 previous).

According to the report, this is first time in four months that services PMI strengthened. Even better, employment apparently rose “at the fastest pace since May” of this year and the volume of new business received “rose for the thirty-fourth consecutive month in October.” On a less upbeat note, “the pace of expansion in output was still the second-weakest since May 2013″ and the 12-month activity outlook “was the weakest in two-and-a-half years.”

Major currency movers:

Given the major reports/events above, you probably expected the euro and pound to be the main movers. In fact, they were actually mixed during the forex session and some pound and euro pairs even had very little volatility. Anyhow, here are the major currency movers during the forex session.

AUD – The Aussie was showing weakness against most of its forex rivals. There were no direct catalysts that could account for the weakness. But given the demand it received during the Asian session, it’s possible that forex traders were just taking some delicious profits off the table.

AUD/USD is down by 23 pips (0.32%) to 0.7189, AUD/CAD is down by 22 pips (-0.24%) to 0.9394, AUD/CHF is down by 35 pips (-0.50%) to 0.7118

NZD – The high-yielding Kiwi was likewise weak despite the risk-on sentiment. Like the Aussie, there were no catalysts for the weakness, but it’s possible that forex traders were pricing in the negative result for the most recent dairy auction and New Zealand’s disappointing jobs data from earlier.

NZD/USD is down by 24 pips (-0.36%) to 0.6636, NZD/JPY is down by 26 pips (-0.34%) to 80.39, NZD/CHF is down by 38 pips (-0.58%) to 0.6570

CHF – If the Aussie and the Kiwi were weak, then the Swissy was strong… very strong, which is rather weird… very weird given the risk-on sentiment. One possible explanation is that Swissy shorts are just getting out of their positions ahead of Switzerland’s CPI reading for tommorow.

USD/CHF is down by 25 pips (-0.27%) to 0.9897, GBP/CHF is down by 43 pips (-0.28%) to 1.5260, EUR/CHF is down by 38 pips (-0.35%) to 1.0818

Upcoming reports/events:

See also:

Asia Session Recap

U.S. Session Recap

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