Article Highlights

  • Italian services PMI: 52.4 vs. 52.6 expected, 52.3 previous
  • Spanish services PMI: 54.2 vs. 54.7 expected, 55.0 previous
  • French final services PMI: 54.1 vs. unchanged at 53.9 expected
  • German final services PMI: 53.4 vs. unchanged at 53.2 expected
  • Euro Zone final services PMI: 53.7 vs. unchanged at 53.6 expected
  • U.K. services PMI: 54.5 vs. 55.8 expected, 56.2 previous
  • Euro Zone retail sales m/m: -0.3% vs. 0.3% expected, -0.6% previous
  • U.S. NFP report coming up
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Today is another NFP Friday, so volatility was in short supply, with many currency pairs milling about in tight ranges. The major European currencies had some directional movement, though, and they all showed weakness, particularly the safe-haven Swissy.

Major Events/Reports:

NFP Friday! – Today is another NFP Friday! And as usual, forex traders were hunkering down ahead of the NFP report. As a result, both directional movement and volatility got sapped on many pairs, with many pairs milling about in tight ranges.

By the way, if you’re planning to trade the NFP report for the January period, and need to get up to speed on what happened last time and what’s expected this time, then make sure read up on Forex Gump’s Forex Preview here.

U.K. services PMI drops – According to Markit, the U.K.’s services PMI reading slumped from 56.2 to 54.5 in January, which is much harder than the expected drop to 55.8. In addition, this puts an end to three months of improving readings. Moreover, January’s reading is the lowest reading in three months.

According to the details of the PMI report, the weaker expansion in January was due to output, new businesses, and employment all increased at slower rates.

Sentiment flips back to risk-on – Risk sentiment improved today after a pretty downbeat day yesterday. As a result, most European equity indices were in the green for the session.

  • The pan-European FTSEurofirst 300 was up by 0.59% to 1,436.92
  • The blue-chup Euro Stoxx 50 was up by 0.53% to 3,274.50
  • Germany’s DAX was also up by 0.25% to 11,656.50
  • The U.K.’s FTSE 100 was up by 0.50% to 7,176.50

The risk-on vibes also kept U.S. equity futures well supported.

  • S&P 500 futures were up by 0.14% to 2,278.75
  • Nasdaq futures were up by 0.11% to 5,136.13

Market analysts attributed the risk-friendly environment during the session to strong earnings reports for various European companies.

Major Market Movers:

GBP – The pound had a steady but got kicked broadly lower when the harder-than-expected drop in the U.K.’s services PMI reading was released. After that, most pound pairs traded sideways in very tight ranges.

GBP/USD was down by 28 pips (-0.22%) to 1.2490, GBP/JPY was down by 37 pips (-0.26%) to 141.24, GBP/NZD was down by 33 pips (-0.19%) to 1.7188

EUR & CHF – There were no catalysts for the Swissy while the PMI reports for the Euro Zone were net positive. However, both the safe-haven Swissy and the lower-yielding were under bearish pressure, likely because of the risk-on vibes in Europe.

EUR/USD was down by 23 pips (-0.21%) to 1.0735, EUR/NZD was down by 26 pips (-0.18%) to 1.4771, EUR/JPY was down by 29 pips (-0.24%) to 121.38

USD/CHF was up by 27 pips (+0.27%) to 0.9961, AUD/CHF was up by 15 pips (+0.20%) to 0.7612, NZD/CHF was up by 17 pips (+0.24%) to 0.7239

Watch Out For:

  • 1:30 pm GMT: U.S. non-farm payrolls (175K expected, 156K previous), jobless rate (steady at 4.7% expected), and average hourly earnings (0.3% expected, 0.4% previous)
  • 2:15 pm GMT: Chicago Fed President Charles Evans will speak
  • 2:45 pm GMT: Markit’s final U.S. services PMI (no change from 55.1 expected)
  • 3:00 pm GMT: ISM’s U.S. non-manufacturing PMI (57.0 expected, 56.8 previous)
  • 3:00 pm GMT: U.S. factory orders (0.5% expected, -2.4% previous)

See also:

Asian Session Recap 
U.S. Session Recap

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