Article Highlights

  • Italy on National Day holiday today
  • Spanish unemployment change: -119.8K vs. -110.0K expeced, -83.6K previous
  • U.K. construction PMI: 51.2 vs. 52.0 expected, 52.0 previous
  • Euro Zone PPI m/m: -0.3% vs. 0.1% expected, 0.3% previous
  • Euro Zone PPI y/y: -4.4% vs. -4.1% expected, -4.2% previous
  • ECB maintains refinancing rate at 0.00% as expected
  • ECB maintains marginal lending rate at 0.25% as expected
  • ECB maintains deposit rate at -0.40% as expected
  • ECB maintains QE program at €80B as expected
  • ECB press conference coming up
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The ECB maintained its monetary policy. That was expected, though, so volatility was subdued during the morning London session, as forex traders waited for the ECB press conference (and the OPEC press conference). The safe-haven currencies got a little boost, though, probably because of all that uncertainty.

Major Events/Reports:

Poor U.K. manufacturing PMIMarkit’s U.K. construction PMI reading for April missed market expectations that it will hold steady at 52.0 by dropping to 51.2. Commentary from the PMI report noted that construction activity grew at the weakest pace in almost three years while new orders declined for the first time since April 2013. Survey respondents were blamed the decline in new orders and the overall deterioration in business conditions to economic uncertainty brought about by the threats of a Brexit.

ECB monetary policy decision – The ECB decided to maintain its monetary policy. That was already expected by the market, however, so forex traders are now waiting for what Draghi and company have to say in the upcoming ECB press conference. You can watch the ECB press conference live here.

Commodities climb higherCommodities were broadly in the green during the morning London session, with the safe-haven gold up by 0.37% to 1,219.25. Oil benchmarks were also now in positive territory after dipping earlier, with U.S. crude oil up by 0.06% to $49.04 per barrel and Brent crude oil up by 0.24% to $49.84 per barrel.

There weren’t any apparent catalysts for the broad-based rise in commodity prices, but oil benchmarks began to get buyers after Saudi Energy Minister Khalid al-Falih told the media before the OPEC meeting started that: “We [Saudi Arabia] will be very gentle in our approach and make sure we don’t shock the market in any way.”

Slight appetite for European equities – European equities got some demand during the morning London session, with the pan-Euopean FTSEurofirst 300 up by 0.30% to 1,354.33, the blue-chip Euro Stoxx 50 up by 0.36% to 3,047.50, and the DAX up by 0.13% to 10,217.50 by the end of the session. As for U.S. equity futures, they were slighty in the red but essentially unchanged by the end of the session, with the S&P 500 futures index down by 0.06% to 2,096.75 and the Nasdaq futures index down by 0.03% to 4,520.00

Tight trading conditions – Volatility for most pairs got sapped during the morning London session. It was already pretty much a given that the ECB will maintain its current monetary policy, so forex traders were probably sitting on their hands while they waited for the upcoming ECB press conference, as well as the OPEC press conference for later. You can watch the ECB press conference live here and you can watch the OPEC conference live here.

Major Currency Movers:

Safe-havens – There was demand for European equities, so there was some risk-taking during the morning London session. However, the uncertainty on what ECB Draghi will say during the ECB press conference, as well as the uncertainty on how the OPEC meeting will go, probably encouraged some forex traders to load up on the safe-haven currencies, with the yen being the safe-haven of choice during this session at least.

AUD/USD was down by 16 pips (-0.23%) to 0.7209, EUR/USD was down by 8 pips (-0.08%) to 1.1186, NZD/USD was down by 6 pips (-0.08%) to 0.6790

USD/CHF was up by 2 pips (+0.03%) to 0.9881, NZD/CHF was down by 5 pips (-0.07%) to 0.6709, AUD/CHF was down by 15 pips (-0.22%) to 0.7122

USD/JPY was down by 16 pips (-0.16%) to 109.00, EUR/JPY was down by 27 pips (-0.23%) to 121.94, CAD/JPY was down by 22 pips (-0.26%) to 83.21

Watch Out For:

  • 12:15 pm GMT: U.S. ADP employment survey (175K expected, 156K previous)
  • 12:30 pm GMT: ECB press conference; watch it live here
  • 12:30 pm GMT: U.S. initial jobless claims (270K expected, 268K previous)
  • 12:35 pm GMT: Federal Reserve Governor Jerome Powell is scheduled to speak
  • 1:00 pm GMT: BOE Governor Mark Carney will give a short speech
  • 2:00 pm GMT: OPEC press conference (tentative schedule); watch it live here
  • 3:00 pm GMT: U.S. crude oil inventories (-2.7M expected, -4.2M previous)
  • 3:45 pm GMT: BOC Deputy Governor Lawrence Schembri will talk about the outlook on Canada’s economy

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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