London Trading Session: Market Insights from Gain Capital's Research Desk

Published: October 1, 2007 6:46 AM

The first London session of the week began a little tamer than usual. Most of the majors continued to digest Friday�s explosive moves. As the session carried one Forex traders saw a strengthening USD. Currency traders also kept an eye on PMI manufacturing numbers released throughout Europe, the last release coming from the United Kingdom. The release showed the index�s reading for September was 55.1 compared to the 55.6 analysts forecasted. GBPUSD was little changed following the news, but had already forfeited 60+ pips due to the strengthening dollar.

After its historic run up last week, EURUSD began to retreat a bit. After reaching a high near the 1.4280s in the previous Asia session, the pair sold off by 60+ pips and dealt into the 1.4220s area. USDCHF also saw a significant move. The pair rallied 100+ pips from the day�s lows to deal back over the 1.1700 mark and into the 1.1720s for the first time in several sessions. The also greenback gained elsewhere. USDJPY managed to crack through two key medium term resistance levels at 115.00 and 115.50 during its 80+ pip march higher dealing into the 115.50s. AUDUSD knocked on the door of an eighteen year high in the .8930s but fell shy when traders offered the pair in the .8920s. Aussie the treated 20+ pips into the .8890s.

Whether the USD�s move higher was currency traders realizing profits, or the beginning of a short term trend remains to be seen. The Forex market will have its hands full in the coming week. Traders are expecting 3 key interest rate decisions from the Bank of England, the European Central Bank, and the Reserve Bank of Australia. If that wasn�t enough investors will be awaiting the ever important Non Farm Payrolls release in the U.S. on Friday. One thing seems clear, the opening rates for the week will likely be significantly different than the opening rates.

Upcoming Data Releases (New York Session):

US: 10amET ISM Manufacturing (Est.: 52.5 / Prior: 52.9)

                     ISM Prices Paid (Est.: 62.3 / Prior: 63.0)