Article Highlights

  • Australian commodity prices y/y: -9.9% vs. -9.1% previous
  • Swiss retail sales y/y: -1.6% vs. -1.7% expected, -2.2% previous
  • Swiss manufacturing PMI: 51.6 vs. 55.3 expected, 55.8 previous
  • Spanish manufacturing PMI: 52.2 vs. 52.1 expected, 51.8 previous
  • Italian manufacturing PMI: 53.5 vs. 52.7 expected, 52.4 previous
  • French final manufacturing PMI: 48.3 vs. unchanged at 47.9 expected
  • German final manufacturing PMI: 54.5 vs. unchanged at 54.4 expectef
  • Euro Zone final manufacturing PMI: 52.8 vs. unchanged at 52.6 expected
  • U.K. manufacturing PMI: 52.1 vs. 50.1 expected, 50.4 previous
  • Euro Zone jobless rate: 10.1% as expected vs. 10.2% previous
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Risk aversion ran away after a short stint yesterday, so the higher-yielding comdolls were in play during today’s morning London session. As for the pound, it was trading mostly sideways while the euro was mostly on the up and up.

Major Events/Reports:

Upbeat Euro Zone PMI reports – Manufacturing PMI reports for the major Euro Zone economies were released earlier and they were relatively good. First on the lineup was Spain’s PMI report and it came in at 52.2 for the month of June, which is a bit better than the expected 52.1 and a noticeable improvement from the previous month’s 51.8 figure. Next, the reading for Italy jumped to 53.5 from, 52.4, beating expectations that it will come in at 52.7.

Meanwhile, the final PMI readings for France and Germany were upgraded, with the reading for France coming in at 48.3 (47.9 originally) while the reading for Germany came in at 54.5, which is an uptick from the original 54.4.

Given all that, the manufacturing PMI reading for the entire Euro Zone in June was also upgraded from 52.6 to a 6-month high of 52.8. Commentary from the PMI report noted that only France was below the 50.0 stagnation level among the Euro Zone economies, since even Greece managed to come in at 50.4. Even better, both manufacturing production and new orders “accelerated to the fastest in the year so far,” this will then “help to drive further modest economic growth in the second quarter.”

U.K. manufacturing PMI jumps – The U.K.’s manufacturing PMI reading for the June period was expected to slide lower from 50.4 to 50.1, so it was a pleasant surprise when it came in at 52.1, which is a five-month high. However, commentary from Markit noted that most of its survey responses were collected before the pro-Brexit vote, so we can probably expect a dip in next month’s reading.

Gove speaks – Who is this Gove fellow and why does what he say matter, you ask? Well, if you read Forex Gump’s Brexit-Related Updates That You Need to Know About, you probably know that Conservative Party members from are vying to be the next British PM, and it just so happens that one of them is pro-Brexit Michael Gove, and what he says could potentially affect when Article 50 of the TEU will be triggered so that formal negotiations for an actual Brexit from the E.U. can start, as well as how such negotiations will likely go.

And today, Gove said that if he becomes the next PM, Article 50 of the TEU will be triggered “not in this calendar year” because he wants some preliminary conversations first. Looks like it’s gonna be a long road if he wins, huh? At least markets probably won’t be too excessively volatile if he does win.

Risk-on European session – Looks like Europe is ending the week on an upbeat note after dipping earlier, with the pan-European FTSEurofirst 300 up by 0.91% to 1,315.08, the blue-chip Euro Stoxx 50 up by 0.82% to 2,886.50, the UK’s FTSE 100 up by 1.04% to 6,572.00, and the DAX up by 0.84% to 9,761.00.

U.S. equity future were able to a bit of green by the end of the morning London session, after spending most of their time in the red, with the S&P 500 futures index up by 0.01% to 2,090.50 and the Nasdaq futures index up by 0.02% to 4,407.88

Major Currency Movers:

NZD – Thanks to the risk-friendly environment, the higher-yielding comdolls (NZD, AUD, CAD) were in demand, but the was the most notable since it stomped all its forex rivals, including the other higher-yielders, to emerge as the one currency to rule them all (during the morning London session at least).

NZD/USD was up by 36 pips (+0.50%) to 0.7181, NZD/JPY was up by 30 pips (+0.41%) to 73.68, NZD/CAD was up by 20 pips (+0.22%) to 0.9277

USD – Normally, the Japanese yen gets the worst of it among the safe-haven currencies (USD, JPY, CHF) during risk-on time, but that’s not the case during today’s morning London session since the Greenback ended up as the worst-performing currency of the session.

USD/JPY was down by 11 pips (-0.11%) to 102.62, USD/CAD was down by 38 pips (-0.30%) to 1.2919, USD/CHF was down by 34 pips (-0.35%) to 0.9733

EUR – The pound may be trading sideways, but the euro was mostly on the rise. No clear catalysts for the euro demand during the session, though. It’s possible that the upbeat PMI readings encouraged some traders to buy up the euro, but that’s not likely since PMI reports rarely impact the euro’s price action.

EUR/USD was up by 30 pips (+0.28%) to 1.1120, EUR/JPY was up by 21 pips (+0.19%) to 114.12, EUR/GBP was up by 25 pips (+0.30%) to 0.8365

Watch Out For:

  • Canada day holiday today
  • 1:45 pm GMT: Markit’s final U.S. manufacturing PMI (revision from 51.4 to 51.3 expected)
  • 2:00 pm GMT: U.S. construction spending (0.6% expected, -1.8% previous)
  • 2:00 pm GMT: ISM’s U.S. manufacturing PMI (51.5 expected, 51.3 previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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