Article Highlights

  • French flash manufacturing PMI: 50.3 vs. 49.9 expected, 50.0 previous
  • French flash services PMI: 49.8 vs. 50.4 expected, 50.3 previous
  • Swiss PPI m/m: -0.4% vs. -0.2% expected, -0.4% previous
  • Swiss PPI y/y: -5.3% vs. -5.1% expected, -5.5% previous
  • German flash manufacturing PMI: 50.2 vs. 51.9 expected, 52.3 previous
  • German flash services PMI: 53.8 vs. 54.7 expected, 55.0 previous
  • Euro Zone flash manufacturing PMI: 51.0 vs. 52.0 expected, 52.3 previous
  • Euro Zone flash services PMI: 53.0 vs. 53.4 expected, 53.6 previous
  • UK CBI industrial trends: -17 vs. -12 expected, -15 previous
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The pound was the (falling) star of today’s morning London forex session, as European forex traders priced-in the Brexit-related events from earlier.

Major Events:

Commodities rally – Commodities were broadly in the green during the morning London session, with oil leading the uphill charge due to an upbeat statement from the International Energy Agency (IEA) wherein the organization said that it expects U.S. shale production to fall this year and next year, which likely eased oversupply fears a bit.

U.S. crude oil skyrocketed by 4.00% to $33.02 per barrel while Brent crude oil was up by a very solid 3.97% to $34.32 per barrel during the session.

Risk-taking aplenty – There were healthy amounts of risk-taking during the session, with the pan-European FTSEurofirst 300 up by 1.40% to 1,303.12 and the DAX up by 1.76% to 9,553.00 during the morning London session. U.S. equity futures were also in positive territory, with the S&P 500 futures up by 0.99% to 1,933.50 and the Nasdaq futures up by 1.12% to 4,207.50.

Market analysts pointed to the broad-based commodities rally as the main reason for the risk-taking since it boosted demand for mining companies, among others. All that risk appetite didn’t do any favors for the safe-haven gold, however, since it was down by 1.89% to $1,207.50 per troy ounce during the session.

Brexit jitters weigh on the pound – Fears of a potential Brexit after London Mayor Boris Johnson came out saying that he supports a Brexit continued to weigh down heavily on the pound, as European forex traders priced-in that piece of news.

It certainly didn’t help that Brexit-related news kept popping up during the session, with one of the more notable ones being the release of Citigroup’s estimate that the chances of a Brexit have been raised from 20-30% to 30-40%, not to mention Citi Economist Michael Saunders’ very pessimistic comment that “The effects of Brexit, if it happens, are likely to be large and painful in economic and political terms, both for the UK and the overall EU.”

Major Currency Movers:

GBP – Brexit jitters weighed down so heavily on the pound that the gaps from earlier were never closed and the pound just kept on moving ever lower across the board. The pound was without a doubt the weakest currency during the morning London session.

GBP/USD was down by 121 pips (-0.85%) to 1.4086, GBP/AUD was down by 226 pips (-1.15%) to 1.9584, GBP/CAD was down by 181 pips (-0.91%) to 1.9360

Comdolls – The higher-yielding comdolls (AUD, CAD, NZD) were getting some much needed loving from European forex traders, thanks to the commodities rally and the prevalence of risk-taking during the morning London forex session. The Loonie and the Aussie were competing for hegemony over their rivals, with the Aussie ultimately coming out on top (during this session at least).

AUD/USD was up by 22 pips (+0.30%) to 0.7192, AUD/NZD was up by 34 pips (+0.32%) to 1.0795

CAD/JPY was up by 31 pips (+0.38%) to 82.36, CAD/CHF was up by 46 pips (+0.64%) to 0.7260

NZD/CHF was up by 33 pips (+0.51%) to 0.6647, NZD/JPY was up by 23 pips (+0.29%) to 75.42

CHF – The safe-haven currencies were all feeling the burn from the prevailing risk-on sentiment during the morning London session, but the Swissy was clearly the weakest since it lost out to its fellow safe-havens.

USD/CHF was up by 48 pips (+0.49%) to 0.9979, AUD/CHF was up by 55 pips (+0.76%) to 0.7175, CAD/CHF was up by 45 pips (+0.64%) to 0.7260

EUR – The Swissy may have been really weak, but the euro was weaker still. It only managed to score a win against the pound. The slew of mostly disappointing PMI readings may have been a factor, but the potential consequences of a Brexit to the euro zone was likely pulling down on the euro as well.

EUR/USD was down by 60 pips (-0.54%) to 1.1028, EUR/CAD was down by 95 pips (-0.62%) to 1.5153, EUR/AUD was down by 129 pips (-0.84%) to 1.5331

Watch Out For:

  • 2:45 pm GMT: Markit’s U.S. flash manufacturing PMI (52.5 expected, 52.4 previous)
  • 3:30 pm GMT: CB Australian leading index (0.3% previous)us)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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