Article Highlights

  • French BOF business sentiment: 97 vs. 100 expected, 99 previous
  • Swiss CPI m/m: 0.1% vs. 0.2% expected, 0.2% previous
  • Swiss CPI y/y:-0.4% vs. -0.4% expected, -0.4% previous
  • U.K. industrial production m/m: 2.0% vs. 0.5% expected, 0.3% previous
  • U.K. industrial production y/y: 1.6% vs. -0.3% expected, -0.2% previous
  • U.K. manufacturing production m/m: 2.3% vs. 0.0% expected, 0.1% previous
  • U.K. manufacturing production y/y: 0.8% vs. -1.3% expected, -1.9% previous
  • RBNZ statement and presser for later
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Commodities were in focus during today’s morning London session, so it goes without saying that the comdolls were in focus, too. The pound, meanwhile, got buoyed by positive U.K. production numbers, but ended the session mixed.

Major Events/Reports:

Positive U.K. production numbers – Total industrial production in the U.K. jumped by 2.0% month-on-month in April, which is great because it is the largest increase since July 2012, and it’s better than the expected 0.5% increase and the previous month’s 0.3% increase. This translates to a year-on-year increase of 1.6%, which is far better than the expected 0.3% contraction.

The jump in total industrial was due to a surge in manufacturing output, with manufacturing production rising sharply by 2.3% month-on-month (0.0% expected, 0.1% previous) and climbing by 0.8% year-on-year (-1.3% expected, -1.9% previous).

The higher manufacturing production numbers were due to a substantial increase in output for pharmaceutical products and transport equipment.

Commodities surgeCommodities were on a tear during the morning London session, extending their gains from the earlier session.

The precious metal gold was up by 0.72% to $1,256.00 per troy ounce while silver was up by 2.63% to $16.825 per troy ounce. Also, the base metal copper was up by 0.78% to $2.067 per pound while oil benchmarks were well in the green, with U.S. crude oil up by 1.21% to $50.97 per barrel while Brent blend crude oil was up by 1.34% to $52.13 per barrel.

Some market analysts attributed the broad-based rally to speculation that major central banks will maintain policies that support the financial markets while other market analysts are attributing the rise to higher demand from China, thanks to the increase in China’s imported commodities, particularly industrial metals like copper. Others still are pointing to the Greenback’s recent weakness, which made globally-traded commodities cheaper.

Downbeat day in Europe – Commodities were on the rise while U.S. equity futures were in the green, with the S&P 500 futures index up by 0.20% to 2,114.50 and the Nasdaq futures index up by 0.12% to 4,519.62.

However, European markets were in sour mood today, with the pan-European FTSEurofirst 300 down by 0.41% to 1,354.64, the blue-chip Euro Stoxx 50 down by 0.39% to 3,031.00, and the DAX down by 0.41% to 10,245.50 by the end of the session.

Market analysts were pointing to a plethora of things, from caution over the World Bank’s global growth downgrade from 2.9% to 2.4%, to China’s mixed data from earlier, to profit-taking after two straight days of gains.

Major Currency Movers:

Comdolls – The comdolls (CAD, AUD, NZD) dominated the morning London session, thanks to the broad-based commodities rally. Among the comdolls, the Loonie was the strongest, as well as the best-performing currency of the morning London session. The Kiwi, meanwhile, was the weaker among the three, probably because forex traders were wary of loading up on the Kiwi ahead of the RBNZ’s rate decision and presser for later. Oh, Forex Gump has a write-up on Things to Remember When Trading the RBNZ Statement, so read up on that if you plan to trade that event.

USD/CAD was down by 68 pips (-0.54%) to 1.2664, AUD/CAD was down by 10 pips (-0.11%) to 0.9470, NZD/CAD was down by 12 pips (-0.13%) to 0.8880

AUD/USD was up by 40 pips (+0.53%) to 0.7477, AUD/JPY was up by 36 pips (+0.45%) to 80.03, AUD/NZD was up by 13 pips (+0.12%) to 1.0662

NZD/USD was up by 28 pips (+0.40%) to 0.7011, NZD/JPY was up by 24 pips (+0.33%) to 75.04, EUR/NZD down up by 47 pips (-0.29%) to 1.6230

GBP – The pound started off on a weak footing, but began spiking higher when the better-than-expected U.K. production numbers came out. However, pound bears were trying their best to sell into the rally, but the bulls steadily chewed right through the sell orders, causing the pound to end the session on a high note against the yen and the Greenback. The pound was still slightly in the red against the comdolls and the Swissy, though.

GBP/USD was up by 45 pips (+0.32%) to 1.4591, GBP/JPY was up by 37 pips (+0.23%) to 156.16, GBP/CAD was down by 36 pips (-0.20%) to 1.8482

USD – The Greenback was the weakest currency of the session. There weren’t any apparent catalysts for the Greenback’s weakness during the morning London session, but it was possibly due to lingering uncertainty ahead of next week’s FOMC meeting.

USD/CHF was down by 39 pips (-0.41%) to 0.9613, USD/JPY was down by 9 pips (-0.09%) to 107.02, EUR/USD was up by 13 pips (+0.11%) to 1.1382

Watch Out For:

  • 12:15 pm GMT: Canadian housing starts (189K expected, 191.5K previous)
  • 12:30 pm GMT: Canadian building permits (-1.5% expected, -7.0% previous)
  • 2:00 pm GMT: U.K. NIESR GDP estimate (0.3% previous)
  • 2:00 pm GMT: JOLTS job openings (5.67M expected, 5.76M previous)
  • 2:30 pm GMT: U.S. crude oil inventories (-3.2M expected, -1.4M previous)
  • 9:00 pm GMT: RBNZ rate decision and statement (rate cut from 2.25% to 2.00% expected)
  • 11:00 pm GMT: RBNZ press conference

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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