Article Highlights

  • Swiss CPI m/m: 0.0% vs. -0.1% forecast, 0.1% previous
  • European Services PMI: 52.3 vs. 52.4 forecast/previous
  • European Composite PMI: 52.1 vs. 52.2 forecast/previous
  • U.K. CIPS/Markit Services PMI: 56.2 vs. 58.5 forecast, 58.7 previous
  • European Retail Trade: -1.3% vs. -0.8% forecast, 0.9% previous
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Services PMI data disappointed from both Europe and the U.K. this morning, adding to the weaker read we saw from the Chinese HSBC/Markit services PMI data during the Asia session. This means that sentiment on economic conditions from services purchasing managers across globe continues to weaken since reaching 2014 peaks around August or September.

Both the euro and the British pound didn’t take too kindly to the news, but we’re seeing mixed behavior among the major and cross-currency pairs.  This stems catalysts during Asia from BOJ Governor Kuroda (sees no limits to what the BOJ will do to defeat deflation) and U.S. dollar strength, most likely sparked by the results of midterm elections. In the U.S., the Republican party took the Senate to control both houses of Congress, which investors view as favorable for risk taking in the markets, which seems to have a positive effect for the Greenback. Overall, the morning London session has really been about USD strength, and JPY and comdoll weakness (thanks to the strong dollar):

USD/JPY is up 95 pips (+0.84%) to 114.54, EUR/AUD is up 136 pips (+0.95%) to 1.4493, and NZD/USD is down 62 (-0.81%) to .7744

The forex calendar for the Wednesday afternoon London/morning U.S. session will most likely keep the party going, already kicking it off with a better than expected read from the ADP employment survey at 1:15 pm GMT.  This private employment data point can be viewed as an early indicator for the always highly anticipate U.S. NFP report, and with the number coming in at 230K vs. 220K forecast/225K previous, it’s a good sign we’ll see more positive reads from the government report this Friday.  The reaction so far has been slightly dollar positive, but it’s still early to get a clear picture on direction.

Coming up to close the London session is the final read on global services PMI, this time for the U.S. in the form of the ISM non-manufacturing PMI data at 3:00 pm GMT.  This event is most likely a short-term market mover, with a forecast of 58 vs. 58.6 to show a slight decline in purchasing manager sentiment in the U.S.  Definitely one to watch during a very active session for the U.S. dollar as U.S. forex traders continue to react to the midterm election results.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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