London Session Recap

Daily Forex Fundamentals | Written by Forex.com | Sep 04 08 12:21 GMT |

Weak Euro-zone data battled higher oil prices in the London session in terms of dictating the pace for the USD. This led to an overall mixed session for the buck against the majors. French unemployment ranks rose 19K in 2Q after dipping a sharp -82K the prior quarter. Meanwhile, German factory orders plunged -1.7% in July after a -2.6% print the prior month and has now declined for eight consecutive months. The weak data nudged EUR/USD about -15 points lower from the session open to a close near the 1.4470 area. Positioning ahead of the ECB rate decision and statement limited any major moves here. Oil was bid in London trading as Hurricane Ike strengthened in the Atlantic to a category 4 storm. The commodity opened near $109.25/bbl and was sitting about $1 higher at the close after running up towards a session high near $110.60/bbl. This sudden uptick helped send USD/CAD markedly lower towards a session low near 1.0550, though the pair would eventually close the session up about 15 pips from where it opened towards the 1.0630 mark. The European Central Bank kept rates unchanged at 4.25% in the early NY session and now the market awaits the press statement at 1230GMT. Recent comments from ECB member Axel Weber that a rate cut is currently premature are likely to resonate in Trichet's post rate decision comments. That said Trichet will also have to acknowledge that economic growth has clearly slowed with 2Q GDP printing negative and paltry July retail sales -- which plunged -0.4% after slipping -0.9% prior -- suggesting no speedy recovery in 3Q. While likely to be similar to the prior press statement which harped on inflation worries and downgraded growth slightly, we would expect a potential bounce in EUR/USD if Trichet suggests rate cuts are out of the question. In this case we would look to sell post-Trichet EUR bounces as reality sinks in that the Euro-zone economy remains on shaky ground. Upcoming Economic Data Releases (NY Session) Prior Estimate 9/4 12:15GMT US ADP Employment Change AUG 9K -30K 9/4 12:30GMT US Nonfarm Productivity 2Q F 2.20% 3.50% 9/4 12:30GMT US Unit Labor Costs 2Q F 1.30% 0.00% 9/4 12:30GMT US Initial Jobless Claims 30-Aug 425K 420K 9/4 14:00GMT US ISM Non-Manf. Composite AUG 49.5 49.5 9/4 15:00GMT US DOE U.S. Crude Oil Inventories 29-Aug -3502K 450K 9/4 15:00GMT US DOE U.S. Gasoline Inventories 29-Aug -1179K -1300K 9/4 US ICSC Chain Store Sales YoY AUG 2.60% - - 9/4 17:40GMT US Fed's Fisher Speaks in Houston on U.S. Economic Challenges 9/4 18:30GMT US Fed's Yellen Speaks in Salt Lake City on U.S. Forex.com http://www.forex.com DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.