Article Highlights

  • European Flash Manufacturing PMI improves: 50.7 vs. 49.9 forecast, 50.3 previous
  • European Flash Services PMI better-than-expected: 52.4 vs. 52.0 forecast, 52.4 previous
  • U.K. Retail Sales weaker: -0.3% vs. -0.1% forecast, 0.4% previous
  • U.K. CBI Industrial Trends weaker: -6% bal vs. -3% bal forecast, -4% bal previous
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It was a pleasant surprise for euro bulls this morning that we saw mostly positive Flash PMI data.  France was the laggard in those numbers, posting weakness in both the services and manufacturing components at 47.3 and 48.1 respectively (below 50.0 indicates contractionary conditions).  Germany posted a below expectations read on their services PMI number, but it was still in expansionary territory with a 54.8 read.  Not having a positive read in a while, forex traders quickly went into bull mode on the euro right from the London open, bringing euro pairs back to positive after taking a hit during the Asia trading session:

EUR/USD is up 19 pips (+0.16%) to 1.2665, EUR/JPY is up 88 pips (+0.65%) to 136.34, and EUR/GBP is up 27 pips (+0.35%) to hold above .7900

Unfortunately for the British pound, U.K. wasn’t as kind today with weak reads from both retail sales data and CBI industrial trends data.  This added fuel to sterling’s recent weakness as traders seem to be lightening up on long positions after hints we may see prolonged low interest rates by the Bank of England hit the markets last week. The pound took a beating throughout the morning London session, but seems to have found a bottom and buyers to slow the pain at the moment.  After hitting lows around 1.5995, GBP/USD has bounce to 1.6030, but sterling isn’t fairing as well agains the comdolls:

GBP/AUD is down 54 pips (-0.29%) to 1.8216, GBP/CAD is down 52 pips (-0.30%) to 1.7970

Finally, we’re seeing a strong sell off in the Japanese yen this morning, which could be a reaction to the Japanese government-debt sale, which drew a negative yield for the first time.  What ever the main catalyst may be, the yen is also taking a beating across the board sine the London session open:

USD/JPY is up 55 pips (+0.52%) to 107.67, GBP/JPY is up up 62 pips (+0.37%) to 172.55, and AUD/JPY is up 64 pips (+0.68%) to 94.68

The forex calendar for the Thursday afternoon London/morning U.S. session has a healthy mix of U.S. data for a fresh picture on what’s going on in one of the world’s largest economies.

Starting at 1:30 pm GMT, we’ll get the weekly U.S. initial jobless claims number (281K forecast vs. 264K previous) which could pull back some of the dollar strength if it comes in above the previous number as expected.

Next is the FHFA House Price Index number at 2:00 pm GMT, forecasted to rise to 0.3% vs. 0.1% previous.  This number took an uncharacteristic dip last month, so we’ll see if it bounces back to the positive trend higher. Soon after, we’ll get the U.S. Flash Manufacturing PMI number to see if we’ll get a positive surprise like what we saw in Europe.  Right now, the forecast is for last month to come in at 57 vs. 57.5 the previous month, so we’ll see what we’ll get at 2:45 pm GMT.

And to close out the London trading session, at 3:00 pm GMT we’ll get the European Flash Consumer sentiment number (-12 forecast vs. -11.4 previous) and the U.S. leading indicator number (0.7% forecast vs. 0.2% previous).  These are both low tier events, but if we do see a huge outlier surprise from expectations/previous reads, they could provide a short-term shot of volatility to currencies. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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