Article Highlights

  • Swiss Q2 GDP q/q: 0.6% vs. 0.4% expected, 0.3% previous
  • Swiss Q2 GDP y/y: 2.0% vs. 0.8% expected, 1.1% previous
  • German factory orders m/m: 0.2% vs. 0.5% expected, -0.3% previous
  • German factory orders y/y: -0.7% vs. -0.2% expected, -3.0% previous
  • Swiss CPI m/m: -0.1% as expected, -0.4% previous
  • Swiss CPI y/y: -0.1% as expected, -0.2% previous
  • Euro Zone retail PMI: 51.0 vs. 48.9 previous
  • Euro Zone final Q2 GDP q/q: unchanged at 0.3% as expected
  • Euro Zone final Q2 GDP y/y: unchanged at 1.6% as expected
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Compared to the earlier Asian session, price action during the morning London session was in the doldrums. Most currency pairs were trading sideways, but Swissy and Aussie pairs were clearly on the move (albeit somewhat subdued).

Major Events/Reports:

Euro Zone final Q2 GDP – The Euro Zone’s GDP growth in Q2 was confirmed at 0.3% quarter-on-quarter and 1.6% year-on-year. Both reading are slower when compared to their respective Q1 readings, with Q1 GDP growing by 0.6% quarter-on-quarter and 1.7% year-on-year.

Looking at the details of the GDP report, consumer spending grew by 0.2% (+0.6% previous), adding 0.1% to quarter-on-quarter GDP growth. Meanwhile, gross fixed investments stagnated (+0.4% previous) and obviously had no contribution to growth. As for trade, net trade was the main driver for the quarterly growth, thanks to exports increasing by 1.1% (+0.0% previous), more than offsetting the 0.4% increase in imports.

Another round of moderate risk-taking – Just like yesterday’s, there were signs of cautious risk-taking activity during the morning London session.

  • The pan-European FTSEurofirst 300 was up by 0.03% to 1,380.23
  • The blue-chip Euro Stoxx 50 was up by 0.20% to 3,086.00
  • The DAX was up by 0.28% to 10,700.70

U.S. equity futures were also getting some love:

  • The S&P 500 futures index was up by 0.09% to 2,180.00
  • The Nasdaq futures index was up by 0.12% to 4,801.12

The risk-on mood was generally being attributed to the broad-based commodities rally, which stoked demand for mining stocks. The U.K.’s FTSE 100 was noticeably down by 0.38% to 6,853.50, though. And market analysts attributed this to lower odds for further stimulus after the U.K. got relatively strong PMI readings in August.

Major Currency Movers:

AUD – Even though there were signs of risk-taking, the higher-yielding Aussie was the worst-performing currency of the morning London session. There weren’t any catalysts for the Aussie’s weakness, but it’s possible that we’re just seeing some profit-taking by the Aussie bulls.

AUD/USD was down by 9 pips (-0.13%) to 0.7626, AUD/JPY was down by 12 pips (-0.15%) to 78.85, AUD/NZD was down by 16 pips (-0.15%) to 1.0393

CHF – Despite the relatively positive economic reports for Switzerland, the Swissy had a weak start during the session, probably because of the prevalence of risk appetite. That changed halfway through the session, though, since the Swissy steadily clawed its way higher against its rivals (and then some). There were no catalysts, but it’s possible that we’re seeing some preemptive positioning ahead of SNB Jordan’s speech later.

USD/CHF was down by 9 pips (-0.09%) to 0.9785, AUD/CHF was down by 16 pips (-0.22%) to 0.7463, CAD/CHF was down by 12 pips (-0.17%) to 0.7579

Watch Out For:

  • 1:45 pm GMT: Markit’s final U.S. services PMI (no change from 50.9 expected)
  • 2:00 pm GMT: U.S. IBD consumer optimism (48.1 expected, 48.4 previous)
  • 2:00 pm GMT: ISM’s U.S. non-manufacturing PMI (55.0 expected, 55.5 previous)
  • 4:15 pm GMT: SNB Chairman Thomas Jordan has a speech
  • 10:45 pm GMT: New Zealand’s quarterly manufacturing sales (-2.6% previous)
  • Dairy auction currently underway (12.7% previous); auction usually ends at around 2:00 pm GMT

Asian Session Forex Recap

U.S. Session Forex Recap

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