- Swiss retail sales y/y: -2.2% vs. -3.5% previous
- Spanish manufacturing PMI: 51.0 vs. 50.8 expected, 52.0 previous
- Italian manufacturing PMI: 49.8 vs. 51.3 expected, 51.2 previous
- French final manufacturing PMI: revised higher to 48.3 vs. steady ay 48.5 expected
- German final manufacturing PMI: unchanged at 53.6 as expected
- Swiss manufacturing PMI: 51.0 v.s 50.6 expected, 50.1 previous
- Euro Zone final manufacturing PMI: revised lower to 51.7 vs. unchanged at 51.8 expected
- U.K. manufacturing PMI: 53.3 vs. 49.0 expected, 48.3 previous
The spotlight was on the pound yet again during today’s morning London session, thanks to easing Brexit-related fears after the U.K. printed a better-than-expected manufacturing PMI reading.
U.K. manufacturing PMI – The U.K.’s manufacturing PMI reading jumped from July’s 41-month low of 48.3 to an 11-month high of 53.3 in August. The 5-point jump “was the joint-greatest in the near 25-year survey history,” according to commentary from the PMI report.
And it gets even better because additional comments from the PMI report were very upbeat. For instance, the PMI report noted that there were “solid inflows of new work from both domestic and export sources, the latter aided by the sterling exchange rate.” Also, employment levels “rose for the first time during the year-to-date” and “Manufacturing production increased at the fastest pace in seven months.”
Risk-taking aplenty – There was a prevalence of risk appetite during the morning London session, since most of the major European equity indices were well in the green.
- The pan-European FTSEurofirst 300 was up by 0.78% to 1,362.84
- The blue-chip Euro Stoxx 50 was up by 0.81% to 3,054.00
- The U.K.’s FTSE 100 was up by 0.17% to 6,793.00
- The DAX was up by 0.50% to 10,645.70
U.S. equity futures were also well-supported, implying that the risk-on mood may spillover into the U.S. session:
- The S&P 500 futures index was up by 0.18% to 2,173.50
- The Nasdaq futures index was up by 0.29% to 4,7787.75
According to market analysts, the risk-friendly environment was due to speculation of a potential merger between Deutsche Bank and Commerzbank and the rally in metal prices, which respectively boosted demand for banking and mining stocks.
Major Currency Movers:
GBP – The better-than-expected manufacturing PMI reading likely eased Brexit-related fears as well as lowering rate cut expectations, causing the pound to charge higher across the board.
GBP/USD was up by 101 pips (+0.76%) to 1.3245, GBP/NZD was up by 164 pips (+0.91%) to 1.8240, GBP/CAD was up by 165 pips (+0.96%) to 1.7383
JPY – The risk-on vibes meant limited safe-haven flows towards the yen. As a result, the yen ended up as the worst-performing currency of the morning London session.
USD/JPY was up by 37 pips (+0.36%) to 103.63, EUR/JPY was up by 40 pips (+0.35%) to 115.54, GBP/JPY was up by 151 pips (+1.12%) to 137.26
CHF – Most Swissy pairs went on a rather wonky round-trip. The Swissy first weakened across the board when the session opened. It then barely budged when Switzerland’s retail sales report was released, but weakened some more when Switzerland’s manufacturing PMI came in better-than-expected. After that, the Swissy began clawing its way higher against most of its forex rivals, despite the risk-on mood and even though there were no catalysts.
USD/CHF was up by 13 pips (+0.13%) to 0.9847 with 0.9884 as session high, EUR/CHF was up by 13 pips (+0.12%) to 1.0977 with 1.1000 as session high, CAD/CHF was down by 5 pips (-0.06%) to 0.7501 with 0.7530 as session high
- 12:30 pm GMT: U.S. initial jobless claims (265K expected, 261K previous)
- 12:30 pm GMT: U.S. final unit labor costs (revision from 2.0% to 2.1% expected)
- 12:30 pm GMT: U.S. final non-farm productivity (revision from -0.5% to -0.6% expected)
- 1:30 pm GMT: Markit/RBC Canadian manufacturing PMI (51.9 previous)
- 1:45 pm GMT: Markit final U.S. manufacturing PMI (steady at 52.1 expected)
- 2:00 pm GMT: U.S. construction spending (0.5% vs. -0.6% previous)
- 2:00 pm GMT: ISM U.S. manufacturing PMI (52.0 expected, 52.6 previous)
Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.
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