Article Highlights

  • U.K. Construction PMI: 57.8 vs. 59.8 forecast, 60.1 previous
  • European Central Bank releases meeting minutes
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Despite a nearly empty calendar, and forex traders checking out for the holiday weekend, we surprisingly saw enough volatility to grab some pips in the euro, pound, and Aussie.

The euro was in rally mode throughout the morning London session, and without any economic data events, the rally was possibly on the news that the European Central Bank increased the borrowing limits in the Emergency Liquidity Assistance, which Greek banks are using to stay alive.  This reduces the possibility of banks defaulting in the short-term and creating a systemic risk event.  The euro is up broadly on the session against the majors (with exception to the Swiss franc):

EUR/USD is up 64 pips (+0.62%) to 1.0828, EUR/JPY is up 64 pips (+0.50%) to 129.50, and EUR/GBP is up 45 pips (+0.63%) to .7304

The British pound felt some pain after the monthly U.K. construction PMI came out weaker and continuing the downtrend in data since hitting highs around 64.0 in October.  It was able to bounce back against some of the broadly weaker currencies (e.g.,  AUD, CAD, and USD), so overall it’s mixed going into the U.S. trading session:

GBP/JPY is down 23 pips (-0.13%) to 177.23, GBP/CHF is down 103 pips (-0.72%) to 1.4222, and GBP/AUD is up 117 pips (+0.60%) to 19619

And pressure on the Aussie continued in the morning London session, sparked in Asia trade by weak trade balance numbers and earlier speculation that Australia’s Triple-A credit rating may be at risk. Forex traders took the Aussie weakness another leg lower during European trade:

AUD/USD is down 50 pips (-0.66%) to .7548, AUD/JPY is down 68 pips (-0.76%) to 90.28, and AUD/NZD is hitting new lows, down 87 pips on the session (-0.85%) to 1.0106

The forex calendar for the Thursday afternoon London/morning U.S. session has a few mid-tier events for currency traders to chew on before calling it a day.

At 12:30 pm GMT, we’ll get Canadian merchandise trade data (-C$2B forecast vs. -C$2.45B previous, U.S. trade balance data (-$41.2B forecast vs. -$41.8B previous), and the weekly initial jobless claims data (286K forecast vs. 282K previous). Again, these are all mid-tier events so don’t expect an automatic pop in volatility, but if we do see a surprise in the trade balance numbers from either country, we could see action in Greenback and Loonie pairs.

At 2:00 pm GMT, we’ll get the U.S. factory orders data (-0.4% forecast vs. -0.2% previous) for another indicator of health in the manufacturing industry. This data point has been disappointing relative to expectations like clockwork since October 2014, so it may be a better-than-average bet we’ll see the same for this latest release.

And at 12:40 pm, Fed Chair Janet Yellen will be giving remarks at the 9th Biennial Federal Reserve System Community Development Research Conference in Washington, D.C. It’s highly unlikely we’ll get new or surprising insights on monetary policy with these remarks, but as with any event that she speaks at, we’ve got to stay alert and be prepared for anything. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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