Article Highlights

  • Spanish services PMI: 54.1 vs. 55.1 expected, 56.0 previous
  • Italian services PMI: 52.0 vs. 51.1 expected, 51.9 previous
  • French final services PMI: 50.5 vs. unchanged at 50.3 expected
  • German final services PMI: 54.4 vs. unchanged at 54.6 expected
  • Euro Zone final services PMI: 52.9 vs. unchanged at 52.7 expected
  • Euro Zone final composite PMI: 53.2 vs. steady at 52.9 expected
  • U.K. final services PMI: unchanged at 47.4 as expected
  • Euro Zone retail trade m/m: 0.0% as expected vs. 0.4% previous
  • Euro Zone retail trade y/y: 1.6% vs. 1.8% expected, 1.6% previous
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Today’s morning London session was relatively more subdued than usual, with some currency pairs trading sideways. The pound was clearly on the move, though. And the same can be said for the Loonie and the Swissy.

Major Events/Reports:

Steady U.K. final services PMI – The final reading for Markit’s July U.K. services PMI was an unchanged at 47.4. This is a drastic drop from June’s 52.3, and the weakest reading since March 2009 to boot, but the final reading didn’t deteriorate any further at least.

Commentary from the PMI report also noted that incoming new businesses “declined for the first time since the end of 2012” and that the pace of contraction was “the fastest since March 2009.” And as expected, the decline in new businesses and the overall deterioration in business sentiment and conditions were attributed to the Brexit referendum.

Risk aversion persists – Aversion to risk continued in Europe for the third day running, with the pan-European FTSEurofirst 300 down by 0.28% to 2,900.00, the blue-chip Euro Stoxx 50 down by 0.18% to 2,901.50, the U.K.’s FTSE 100 down by 0.26% to 6,628.30, and the DAX down by 0.18% to 10,126.00.

U.S. equity futures also got burned, with the S&P 500 futures index down by 0.21% to 2,148.25 and the Nasdaq futures index down by 0.23% to 4,703.62.

Aside from risk sentiment spillover from the earlier Asian session, market analyst also pointed to uncertainty over the planned actions of the major central banks.

Oil recovers – Oil benchmarks were able to stage a recovery during the morning London session, after plummeting during yesterday’s U.S. session. U.S. crude oil was up by 0.89% to $39.86 per barrel while Brent blend crude oil was down by 0.79% to $42.13 per barrel.

Market analysts attributed the recovery in oil prices to the decline in U.S. inventories, as well as the relatively weak U.S. dollar.

Major Currency Movers:

GBP – The pound reigned supreme during the morning London session. There were no bullish catalysts that could account for the pound’s strength, but it’s possible that there was some relief buying after Markit’s final services PMI came in unchanged.

It’s also possible that some pound shorts were unwinding their positions ahead of tomorrow’s BOE statement. By the way, Forex Gump has a write-up on the 3 Things to Remember for the Upcoming BOE Statement. You can read it here.

GBP/USD was up by 51 pips (+0.39%) to 1.3354, GBP/JPY was up by 42 pips (+0.32%) to 134.98, GBP/CHF was up by 66 pips (+0.52%) to 1.2929

CAD – The Loonie was the second-strongest currency of the session after the pound, thanks to the recovery in oil prices.

USD/CAD was down by 33 pips (-0.23%) to 1.3100, NZD/CAD was down by 26 pips (-0.28%) to 0.9416, EUR/CAD was down by 37 pips (-0.25%) to 1.4674

CHF – The Swissy ended up being the weakest currency of the session, which is rather strange because risk aversion appears to have been the dominant sentiment. Perhaps the SNB was sneakily weakening the Swissy again?

USD/CHF was up by 13 pips (+0.13%) to 0.9682, CAD/CHF was up by 27 pips (+0.37%) to 0.7389, EUR/CHF was up by 14 pips (+0.13%) to 1.0845

Watch Out For:

  • 12:15 pm GMT: U.S. ADP employment report (170K expected, 172K previous)
  • 1;45 pm GMT: Markit’s final U.S. services PMI (revision from 50.9 to 51.0 expected)
  • 2:00 pm GMT: ISM’s non-manufacturing PMI (55.9 expected, 56.5 previous)
  • 2:30 pm GMT: U.S. crude oil inventories (-1.6M expected, 1.7M previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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