ForexLive European FX wrap: Early cold wind from China recedes

Forex news, data and trading headlines for the European session 31 August

• Japan data - Vehicle production for July-5.9% y/y (prior was -5.3%)
• July 2015 Japan housing starts 7.4% vs 11.0% exp y/y
• July 2015 German retail sales 1.4% vs 1.0% exp m/m
• August 2015 Swiss KOF leading indicator 100.7 vs 99.5 exp
• June 2015 Spain total mortgage lending 21.8% vs 15.1% prior y/y
• June 2015 Italy retail sales -0.3% vs -0.2% exp m/m SA
• June 2015 Spain current account 1.34bn vs 1.15bn prior
• August 2015 Eurozone HICP flash 0.2% vs 0.1% exp y/y
• August 2015 Italy HICP flash 0.5% vs 0.3% exp y/y
• NZ PM John Key: New Zealand economy well placed to handle global ups and downs
• PBOC continue to add liquidity via SLO
• ECB's Nowotny says it's a challenge for Eurozone that US growth is faster
• China construction bank has lent China Securities Finance Corp ¥148bn
• China to make the decisions for the RBA - Preview from Goldman Sachs and Credit Suisse
• Forex options expiries for the 10am (14.00 GMT) New York cut

We were risk off as the European session kicked off with stocks in Asia showing good losses. EURUSD kept the tone going by continuing its ascent which topped out 101 pips up from the lows at 1.1262. It didn't take long for European players to take advantage of a stock comeback in Asia into the closes and we came off to around 1.1235/40. German retail sales we worth a few pips higher but that didn't last, and not even inflation holding up in the EZ could turn their arm and 1.1200 was tested. A few pips were seen under the big figure and the euro looks to be trying to make a base there

Despite the UK holiday GBPUSD is still trading, although in a tighter range than the euro. It's mooched around in 40 or so pip range between 1.5435 and 1.5395

USDJPY was following the Nikkei around and took 12 pips under 121.00 at the worst point. Again a late rally there saw a bottom in the currency and we trundled back to near 121.40.

It's pretty slow going all round though and it's now up to the US to make sense of the weekend Jackson Hole appearances and what it means for the Fed. By and large the message was that the good ship FOMC should stay on it's current path so that might bring some relief from US traders