Article Highlights

  • European Services PMI: 54.1 vs. 53.7 forecast/previous
  • European Composite PMI: 53.9 vs. 53.5 forecast/previous
  • U.K. Services PMI: 59.5 vs. 58.5 forecast, 58.9 previous
  • European Retail Trade m/m: -0.8% vs. -0.7% forecast, 0.1% previous; y/y at 1.6% vs. 2.4% forecast, 2.8% previous
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The comdolls maintained the intraday trends that kicked off in the Asia session, with the Aussie higher (likely on the tick higher in services PMI data from their big trading partner China), while the New Zealand dollar stabilized but remains under pressure thanks to today’s weak quarterly New Zealand employment data.

AUD/USD another 30 – 40 pips since the London open to trade currently around .8015, while NZD/USD is seeing a bounce after hitting lows around .7465 to trade just above the .7500 handle.

And the Loonie was also a gainer in European trade thanks to another session where we saw the oil markets make new 2015 highs (brent crude jumps to fresh 2015 high of $68.30/barrel).  USD/CAD is on the one way train to the downside, breaking below the 1.2000 handle easily and currently trading down 71 pips (-0.59%) on the session to 1.1993.

The euro saw a pick up in volatility across the board after mostly better-than-expected reads from services PMI data across the euro zone, with Germany being the notable laggard among the group coming in at 54 vs. 54.4 forecast/previous. The shared currency was able to see broad gains with exception to the strong Aussie:

EUR/USD is up 84 pips (+0.77%) to 1.1271, EUR/JPY is up 84 pips (+0.60%) to 134.82, and EUR/NZD is up 230 pips (1.54%) to 1.5015 on the broad Kiwi weakness

The British pound also saw volatility, taking back some of its Asia session losses after a positive services PMI prints better-than expected numbers to ease fears of a slowdown in the U.K. Price action is mixed among Sterling pairs, but we are seeing a broad rally in GBP/USD to make new session highs around 1.5260 going into U.S. trade.

The forex calendar for the Wednesday afternoon London/morning U.S. session is interesting with a few potential market movers from both the U.S. and Canada, as well as scheduled speech by the head of the Federal Reserve.

We’ll begin with fresh reads on the U.S. employment sector, starting with the ADP employment report that just came out at 1:15 pm GMT, ticking lower to 169K vs. 200K forecast and 189K previous. It’s still fresh but we are seeing a broad USD sell off on the news at the moment. USD/JPY dropped about 20 pips on the news to currently trade around 119.60  We’ll then get the quarterly unit labor costs (4.5% forecast vs. 4.1% previous) and non-farm productivity (-1.9% forecast vs. -2.2% previous) data at 1:30 pm GMT but the ADP report (a read on the private jobs sector based on the data from the one of the largest payroll processors) is likely the only focus as it is often viewed as a leading indicator for the government’s monthly non-farm payroll report on Friday.

To close out the Wednesday forex calendar, we’ll get the Canadian Ivey PMI data at 3:00 pm GMT.  This monthly read on purchasing manager sentiment can be a leading indicator and it does tend to be a market mover for the Loonie.  The forecast is for a tick higher to 49.2 vs. 47.9, which may be another step towards breaking the recent trend lower in sentiment since December 2014.

Finally, Federal Reserve Chair Janet Yellen will be in Washington, D.C. to give a speech at the Institute for New Economic Thinking Conference on Finance and Society at 2:15 pm GMT. It’s not likely we will get new insights on the global economy or monetary policy since the Fed’s monetary policy statement last week, but as with any central bank head appearance, it’s always a good idea to be ready for surprises because they can be huge market movers if a surprise does come.  Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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