Daily FX Trading Update: Chinese PMI Falls to 15-month Low – July 24, 2015

Daily FX Trading Update: Chinese PMI Falls to 15-month Low - July 24, 2015

The US dollar advanced against most of its forex rivals as risk aversion set in when commodity prices continued to tumble. Data from the US came in better than expected, with initial jobless claims falling to 255K and the CB leading index showing a strong 0.6% increase and an upgrade in the previous figure. US flash manufacturing PMI is due today, along with new home sales figures. The PMI could show a climb from 53.6 to 53.7 while new home sales could dip from 546K to 543K.

The euro managed to hold on to some of its recent gains to the dollar and yen while advancing against the commodity currencies and the pound. The Greek parliament signed the legislation that would allow harsher austerity measures to be put in place, enabling the country to secure more bailout funds and stay in the euro zone. The ECB also expanded its emergency lending fund to the nation. For today, euro zone PMI readings are up for release and strong figures could give the shared currency a boost.

The pound gave up ground in yesterday’s London trading session when the UK retail sales figure disappointed. The report showed a meager 0.2% uptick versus the projected 0.4% figure but the previous reading was upgraded from 0.2% to 0.3%. Still, the report was enough for some traders to start doubting that consumers are able to take advantage of higher wages and weaker inflation. BBA mortgage approvals are due today and a climb from 42.5K to 43.5K is eyed.

The franc was in a weak spot in recent trading even though there were no reports released from Switzerland. Speculations of further intervention from the SNB kept EURCHF climbing, as the central bank recently admitted to stepping in the forex market to actively weaken the franc. No reports are due from the Swiss economy today.

The yen strengthened in recent trading sessions, thanks to risk aversion and falling commodities. Earlier today, Japan reported an increase in its flash manufacturing PMI from 50.1 to 51.4, reflecting a stronger pace of expansion in the industry. No other reports are due from Japan today, leaving risk sentiment at the helm.

Commodity Currencies (AUD, NZD, CAD)
The comdolls were sold off in recent sessions, as oil and gold prices continued to tumble. Earlier today, China printed a fall in its Markit manufacturing PMI from 49.4 to 48.2 – its lowest level in 15 months. This triggered a sharp selloff for the Aussie, as traders anticipated even weaker trade levels from China’s largest trade partner. Yesterday, Canada printed stronger than expected retail sales figures, with the headline reading showing a 1.0% gain and the core figure showing a 0.9% increase.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.