Article Highlights

  • Swiss trade balance: CHF 2.93B vs. CHF 3.51B previous
  • French flash manufacturing PMI: 48.5 vs. 48.8 expected, 48.6 previous
  • French flash services PMI: 52.0 vs. 50.5 expected, 50.5 previous
  • German flash manufacturing PMI: 53.6 as expected vs. 53.8 previous
  • German flash services PMI: 53.3 vs. steady at 54.4 expected
  • Euro Zone flash manufacturing PMI: 51.8 vs. steady at 52.0 expected
  • Euro Zone flash services PMI: 53.1 vs. 52.8 expected, 52.9 previous
  • Euro Zone flash composite PMI: 53.3 vs. 53.1 expected, 53.2 previous
  • U.K. CBI industrial trends: -5 vs. -10 expected, -4 previous
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Risk sentiment and commodities were apparently driving price action during the morning London session, so battle lines were drawn between the safe-havens and the comdolls.

Major Events/Reports:

Euro Zone PMI edges higher – The Euro Zone’s flash composite PMI ticked higher from 53.2 to a seven-month high of 53.3 in August. The uptick was due mostly to a stronger reading for the services PMI (53.1 vs. 52.8 expected, 52.9 previous), which was able to offset the dip in the manufacturing sector (51.8 vs. steady at 52.0 expected).

Despite the stronger reading for the service sector, however, commentary from Markit was not as upbeat since “business expectations about the year ahead among service providers fell to its lowest since December 2014.” The slide in business expectations was apparently partly due to Brexit-related uncertainty.

Additional commentary noted that:

“While the resilience of the PMI in August will add to the belief that the ECB will see no need for any immediate further stimulus, the weakness of the overall pace of expansion and disappointing trends in hiring, order books, business optimism and prices all suggest that policymakers will keep the door open for more stimulus later in the year”

ECB Coeure Speaks – ECB Member Benoit Coeure was speaking in Geneva earlier, and he said that the Euro Zone needs some structural and fiscal reform. However, if there reforms do not come soon or prove inadequate, then the “ECB would have to do more.”

Metals rise, oil sinks – Commodities had a mixed performance during the morning London session (and the day so far for that matter), with metals getting some love while oil got shunned.

Precious metals were well-supported:

  • Gold was up by 0.11% to $1,344.85 per troy ounce
  • Silver was up by 0.63% to $18.977 per troy ounce

Most base metals found enough buyers to push them into positive territory for the day:

  • Tin was up by 0.31% to $18,515.00 per dry metric ton
  • Aluminum was up by 0.11% to $1,667.25 kilogram
  • Nickel was up by 0.10% to $10,267.50 per dry metric ton

Still no love for oil, though:

  • U.S. WTI crude oil was down by 0.61% to $47.12 per barrel
  • Brent blend crude oil was down by 0.71% to $48.81 per barrel

Market analysts blamed today’s lack of love for oil to renewed oversupply jitters after reports surfaced that Iraq reopened a northern oil pipeline and that the Niger Delta Avengers (yep, that’s what they’re called) were ready to negotiate a ceasefire.

The risk-on train has no brakes! – European market players took cues from the earlier Asian session and hopped aboard the risk-on train.

  • The pan-European FTSEurofirst 300 was up by 0.81% to 1,350.19
  • The blue-chip Euro Stoxx 50 was up by 1.14% to 2,991.00
  • The U.K.’s FTSE 100 was up by 0.67% to 6,874.30
  • The DAX was up by 0.78% to 10,576.00

U.S. equity futures were also printing gains, indicating that the risk-on train will continue to chug along in the upcoming U.S. session.

  • The S&P 500 futures index was up by 0.22% to 2,186.25
  • The Nasdaq futures index was up by 0.26% to 4,824.12

Aside from risk sentiment spillover, the recovery in commodity prices, metals in particular, was likely fueling risk appetite as well, given that mining shares were leading European equities higher.

Major Currency Movers:

Comdolls – The risk-friendly environment and commodities rally gave the Aussie and the Kiwi a boost. Interestingly enough, the Loonie was getting some love as well, even though oil was down in the dumps for the second day this week.

NZD/USD was up by 13 pips (+0.18%) to 0.7336, NZD/JPY was up by 11 pips (+0.16%) to 73.39, NZD/CHF was up by 15 pips (+0.21%) to 0.7048

AUD/USD was up by 14 pips (+0.19%) to 0.7654, AUD/JPY was up by 12 pips (+0.17%) to 76.57, AUD/CHF was up by 15 pips (+0.21%) to 0.7354

USD/CAD was down by 16 pips (-0.31%) to 1.2891, CAD/CHF was up by 11 pips (+0.16%) to 0.7453, CAD/JPY was up by 9 pips (+0.12%) to 77.60

GBP – There weren’t any catalysts, but the pound got a bullish boost at the start of the session. The pound’s price action diverged after that since it continued to gain against the safe-havens while steadily losing ground to the comdolls. The pound still manage to edge out the Aussie and the Kiwi, though, so ended up as the strongest currency of the morning London session.

GBP/USD was up by 25 pips (+0.19%) to 1.3186, GBP/AUD was up by 5 pips (+0.03%) to 1.7229, GBP/JPY was up by 24 pips (+0.19%) to 131.93

CHF – The prevalence of risk appetite put some bearish pressure on the safe-haven currencies. The Swissy was really feeling the pain, though, since it ended up losing to its fellow safe-havens.

USD/CHF was up by 4 pips (+0.05%) to 0.9609, GBP/CHF was up by 28 pips (+0.22%) to 1.2670, EUR/CHF was up by 13 pips (+0.13%) to 1.0900

Watch Out For:

  • 1:00 pm GMT: Chinese CB leading index (0.5% previous)
  • 1:45 pm GMT: Markit’s flash U.S. manufacturing PMI (52.6 expected, 59.9 previous)
  • 2:00 pm GMT: Euro Zone consumer sentiment (-7.7 expected, -7.9 previous)
  • 2:00 pm GMT: U.S. new home sales (0.58M expected, 0.59m previous)
  • 2:00 pm GMT: U.S. Richmond manufacturing index (6 expected, 10 previous)

Asian Session Forex Recap

U.S. Session Forex Recap

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