Article Highlights

  • Weak Chinese manufacturing PMI sparks risk aversion moves in the London session
  • European Sentix Indicator shows a tick lower in investor sentiment: 12.8 vs. 14.3 forecast, 14.1 previous
  • European PPI m/m inline with forecast/previous at -0.2%; y/y -1.6% vs. -1.7% forecast/previous
  • The European commission downgrades its GDP growth forecasts for 2015 to 1.7% from 1.8%
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U.K. banks are on holiday and European data is light, so Chinese data continues to push the forex markets around from the Asia session.

We are seeing movement in the forex markets thanks to the weaker-than-expected Chinese Manufacturing PMI data released during the Asia session (48.1 vs. 48.4 forecast); weak Chinese data tends to spur risk aversion behavior, which means capital flow into “safe haven” assets like the U.S. Dollar and Swiss Franc.  But it’s the Japanese Yen that seems to be benefitting from the fear moves the most, up on the session against the majors:

USD/JPY is down 23 pips (-0.23%) to 101.94, EUR/JPY is down 28 pips (-0.20%) to 141.44, and because of its strong trade relationship with China, AUD/JPY is down the most, -38 pips(-0.40%) to 94.38.

The afternoon London session/morning U.S. session is light on data, but the one piece it does have has the potential to be a market mover.  At 3:00 pm GMT, we’ll get the U.S. ISM Non-Manufacturing survey number, expected to come in at 54.0 vs. 53.1 previous.  In recent releases, the actual read has been disappointing relative to the forecast number for quite some time…will we see another failure to meet expectations? If so, it’ll be out of line with the positive U.S. data we’ve seen recently and potentially a bigger shock to the Greenback than a positive surprise.  Be careful when trading around this time and remember to always use stops!

See also:

Asian Session Recap

U.S. Session Recap

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