Article Highlights

  • Broad European PMI data comes out mostly weaker-than-expected. 52.2 vs. 52.4 forecast, 52.4 previous
  • U.K. Services PMI lower: 57.6 vs. 58.2 forecast & previous
  • European Retail Trade better-than-expected: y/y 0.8% vs. 0.7% forecast, 0.8% previous
  • European Central Bank (ECB) leaves rates unchanged at 0.25%; Press conference at 1:30 pm GMT
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It’s once again that big day for London session forex traders: the monetary policy decision from the European Central Bank!

Ahead of the event, the currency markets mostly saw volatility from the usual London session movers (sterling and euro) thanks to PMI data from both the U.K. and Europe. Both currencies saw selling pressure against the majors, with the euro coming out on top once again against sterling.

And the euro’s fortune turned around quickly as we just got word that the ECB held their rates steady at 0.25% as expected, with no additional announcements at this time.  The reaction was a spike higher for the euro, which is not unexpected given that there has been speculation of some sort of additional monetary policy easing as a possibility to battle recent weak inflation data.

Of course, that’s not all from the ECB as we do have the press conference coming up at 1:30 pm GMT.  ECB President Draghi’s comments do tend to be a catalyst for volatility spikes, especially since he’s disappointed currency traders who were expecting dovish rhetoric.  Euro traders should be very cautious when trading around this event.

In addition to movements from European currencies, New Zealand Dollar traders were in sell mode once again, pushing the Kiwi lower for the third day in a row after weak commodity price data was released earlier this week.

NZD/USD is down 41 pips (-0.50%) to .8527, AUD/NZD is up 53 pips (+0.49%) to 1.0827, and NZD/CAD is down 60 pips (-0.64%) to .9395.

Coming up in the afternoon London session, we’ve got Canadian and U.S. data on tap, as well as the previously mentioned press conference on today’s ECB monetary policy decision.

Also at 1:30 PM GMT, the Canadian Merchandise trade number will be released (0.2B CAD vs. -0.18B CAD previous), and from the U.S. we’ll get the monthly Trade Balance number (-38.5B vs. -39.1B previous) and weekly Initial Claims number (319K vs. 311K previous).  These are second tier events, which means that a spike volatility isn’t expected unless we see big divergence between the actual number vs. the forecast/previous number.

And finally, the U.S. ISM Non-manufacturing number will be out at 3:00 pm GMT.  This is a tier one event, so we should see short-term volatility rise, especially if the actual read is far off from the 53.5 forecasted number and/or 51.6 previous read.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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