Article Highlights

  • French Services PMI: 50.6 actual v.s. 51.8 expected, 51.8 previous
  • German Services PMI: 54.9 actual v.s. 53.6 expected, 53.6 previous
  • Euro Zone Services PMI: 54.4 actual v.s. 54.3 expected, 54.3 previous
  • Euro Zone Composite PMI: 54.3 actual v.s. 54.1 expected, 54.1 previous
  • U.K. Services PMI: 55.6 actual v.s. 57.7 expected, 57.4 previous
  • Euro Zone Retail Trade m/m: 0.4% actual v.s. 0.5% expected, -0.2% previous
  • ECB maintains refinancing rate at 0.05% as expected
  • ECB maintains deposit rate at -0.2% as expected
  • ECB press conference coming up
  • U.S. and Canadian trade data on tap
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Today’s morning London forex session was rather subdued ahead of the ECB’s press conference, with many currency pairs imprisoned in tight ranges throughout the course of the session. The Aussie and the pound were rather restless, though.

Despite the prevailing risk-on sentiment due to the strong rally in Wall street, which pushed the DAX up by 1.43% to 10,191.50 during the forex session, forex traders weren’t inclined to load up on the higher-yielding comdolls since comdoll pairs just milled about in tight ranges during the session.

The only exception was the Aussie since it was slowly bleeding out during the entire duration of the forex session. There were no catalysts that could account for the broad weakness, though, so European forex traders were probably just pricing-in Australia’s not-too-happy data from earlier, especially the surprising drop in retail sales.

AUD/USD is down by 13 pips (-0.19%) to 0.7001, AUD/CAD is down by 16 pips (-0.17%) to 0.9287, AUD/JPY is down by 26 pips (-0.32%) to 84.22

The pound’s price action, meanwhile, was a roller coaster ride since it first took a plunge shortly after services PMI printed a drop instead of a slight increase. Apparently, this was the lowest services PMI reading since May 2013, so forex traders bullish on the pound naturally got squeezed out.

After that, the pound began to slowly claw its way back up (and then some). There weren’t any other economic reports released during the forex session that could have caused a change in sentiment for the pound, but it’s possible that the prevailing risk-on sentiment and the FTSE 100’s 1.36% rise to 6,166.30 may have created some demand for the high-yielding pound.

It’s also possible that forex traders took a closer look at the services PMI report and realized that the “business activity” and “new business received” sub-components have been rising for 32 consecutive months.

GBP/USD is up by 8 pips (+0.06%)  to 1.5280 with 1.5232 as session high, GBP/CHF is up by 13 pips (+0.10%) to 1.4825 with 1.4757 as session high, GBP/AUD is up by 50 pips (+0.23%) to 2.1812 with 2.1691 as session high

As for the euro, it had a mixed performance, with some euro pairs ending the forex session flat despite a ton of data for the euro zone. Well, the ECB did decide to keep rates unchanged as expected, so most forex traders were probably just avoiding the euro ahead of the ECB’s press conference later.

EUR/USD is up by 13 pips (+0.12%) to 1.1232, EUR/CAD is up by 7 pips (+0.05%) to 1.4885, EUR/NZD is down by 7 pips (-0.04%) to 1.7678

Oh, boy. We’ve got a really heavy forex calendar for the upcoming afternoon London/morning U.S. session, so y’all better buckle up.

We’ll start with a bunch of top-tier items at 1:30 pm GMT. Get ready for the simultaneous release of Uncle Sam’s initial claims (275K expected, 271K previous) and the respective trade data for th U.S. (-42.2B expected, -43.8B previous) and Canada (-1.2B expected, -0.5 previous). Do note that Uncle Sam’s trade deficit is expected to decrease while Canada’s trade deficit is expected to increase, so make sure to observe how USD/CAD reacts.

The ECB’s press conference is also scheduled for 1:30 pm GMT, and some market analysts are expecting the ECB to cut their inflation outlook, so watch out for that if you have an open position or order on the euro.

Next, at 2:45 pm GMT, we’ll get Markit’s final services PMI (55.2 expected, 55.2 previous). Do note that no revision is expected, so a surprise revision may trigger a reaction, although that’s unlikely since ISM’s non-manufacturing PMI (58.2 expected, 60.3 previous) will follow shortly at around 3:00 pm GMT. Make sure to note that ISM’s non-manufacturing PMI is expected to drop a bit, so the Greenback may see some weakness if the actual reading comes in as expected or worse. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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