Article Highlights

  • German preliminary GDP q/q: 0.4% vs. 0.2% expected, 0.7% previous
  • German final HICP m/m: unchanged at 0.4% as expected
  • German final HICP y/y: unchanged at 0.4% as expected
  • Italian preliminary GDP q/q: 0.0% vs. 0.2% expected, 0.3% previous
  • U.K. construction output m/m: -0.9% vs. 0.9% expected -2.0% previous
  • U.K. construction output y/y: -2.2% vs. -2.1% expected -1.6% previous
  • Euro Zone flash Q2 GDP q/q: unchanged at 0.3% as expected
  • Euro Zone industrial production m/m: 0.6% vs. 0.5% expected, -1.2% previous
  • Euro Zone industrial production y/y: 0.4% vs. 0.7% expected, 0.3% previous
  • U.S. retail sales coming up
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Volatility was relatively more subdued than usual during the morning London session, as forex traders waited for the release of Uncle Sam’s retail sales report. There was some directional movement, though.

Major Events/Reports:

Euro Zone Q2 GDP growth – The second estimate for the Euro Zone’s Q2 GDP came in at a seasonally-adjusted rate of 0.3%, unchanged from the preliminary reading. This is, however, slower than Q1’s 0.6% expansion.

The slower pace of growth in Q2 was apparently due to slower growth from Germany (0.4% vs. 0.7% previous) and stagnant growth from both Italy (0.0% vs. 0.3% previous) and France (0.0% vs. 0.7% previous).

Commodities tumble – Commodities were broadly in retreat during the morning London session.

Precious metals got kicked lower:

  • Gold was down by 0.40% to $1,344.55 per troy ounce
  • Silver was down by 0.68% to $19.883 per troy ounce

Base metals were sold off particularly hard:

  • Copper was down by 1.96% to $2.148 per pound
  • Nickel was down by 2.42% to $10,467.50 per dry metric ton
  • Zinc was down by 2.09% to $2,233.25 per dry metric ton
  • Tin was down by 0.87% to $18,167.50 per dry metric ton

Even oil was printing losses as well:

  • U.S. WTI crude oil was down by 0.34% to $43.34 per barrel
  • Brent blend crude oil was down by 0.59% to $45.77 per barrel

Market analysts couldn’t pinpoint the reason for the broad-based retreat, but the slide in base metals was being attributed by some analysts to poor Chinese economic data from earlier.

Tight trading conditions – Volatility usually gets sapped ahead of top-tier reports. And today was a usual day since the U.S. will be releasing its retail sales report later, so volatility dried up during the morning London session. There was some directional movement though, as highlighted below.

By the way, Forex Gump has a write-up for the Uncle Sam’s retail sales report. Check it out here.

Major Currency Movers:

EUR – Economic reports for the Euro Zone were mixed, but GDP growth in the Euro Zone did slow down in Q2. That didn’t seem to bother forex traders too much, though, since the euro was the best-performing currency of the session.

EUR/USD was up by 9 pips (+0.08%) to 1.1151, EUR/AUD was up by 29 pips (+0.20%) to 1.4523, EUR/CHF was up by 32 pips (+0.29%) to 1.0886

CHF – The Swissy was the weakest currency during the morning London session, even though there weren’t any direct catalysts for the Swissy. Maybe the SNB was sneakily weakening the Swissy again after a brief hiatus yesterday?

USD/CHF was up by 21 pips (+0.21%) to 0.9763, CAD/CHF was up by 15 pips (+0.20%) to 0.7526, GBP/CHF was up by 25 pips (+0.20%) to 1.2650

AUD – Risk sentiment was a bit mixed during the morning London session, but commodities were broadly in retreat. And the latter was probably the reason why the Aussie got dragged down.

AUD/USD was down by 10 pips (-0.12%) to 0.7676, AUD/JPY was down by 12 pips (-0.16%) to 78.31, AUD/CAD was down by 11 pips (-0.12%) to 0.9958

Watch Out For:

  • 12:30 pm GMT: Headline (0.4% expected, 0.6% previous) and core (0.2% expected, 0.7% previous) readings for U.S. retail sales
  • 12:30 pm GMT: Headline (0.1% expected, 0.5% previous) and core (0.2% expected, 0.4% previous) readings for U.S. PPI
  • 1:30 pm GMT: U.K. CB leading index (-0.2% previous)
  • 2:00 pm GMT: University of Michigan preliminary U.S. consumer sentiment (91.5 expected, 90.0 previous)
  • 2:00 pm GMT: U.S. business inventories (0.1% expected, 0.2% previous)

See also:

Asian Session Forex Recap

U.S. Session Forex Recap

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