- Germany on Unity Day Holiday
- Swiss retail sales y/y: -3.0% vs. -1.7% expected, -2.2% previous
- Swiss manufacturing PMI: 53.2 vs. 51.8 expected, 51.0 previous
- Euro Zone final manufacturing PMI: unchanged at 52.6 as expected
- U.K. manufacturing PMI: 55.4 vs. 52.1 expected, 53.4 previous
British PM Theresa May’s announcement that her government would start the process for an actual Brexit by March 2017 still weighed on the pound during today’s morning London session.
U.K. manufacturing PMI – The U.K.’s manufacturing PMI reading from Markit/CIPS came in at 55.4 for the month of September. This is substantially better than the expected 52.1 reading. In addition, it marks the second consecutive month of improving PMI readings. Moreover, the September reading is the highest since June 2014.
According to commentary from the PMI report, the rates of expansion “in output and new orders accelerated further, rising at rates rarely achieved since the middle of 2014.” Even better, additional commentary noted that domestic demand remained strong, but “the weaker sterling exchange rate [also] drove up new orders from abroad.” In fact, “the level of incoming new export orders [increased] at the fastest pace since January 2014.”
Slight appetite for risk – European markets are starting the week with some hints of optimism, given that most European equities were slightly in the green.
- The pan-European FTSEurofirst 300 was up by 0.17% to 1,352.92
- The blue-chip Euro Stoxx 50 was up by 0.44% to 3,004.50
One equity index was really living it up, though.
- The U.K.’s FTSE 100 was up 1.32% to 6,991.20
The overall appetite for risk was due to optimism over news that Britain’s Henderson Global Investors will merge with Janus Capital, market analysts said. The large jump in the U.K.’s FTSE 100, meanwhile, was attributed by market analysts to the strong performance of British exporters after the pound weakened on Theresa May’s announcement that her government will be triggering Article of the TEU by March next year.
For those who don’t know, Article 50 of the Treaty on European Union (TEU) needs to be triggered in order to start the formal process for an actual Brexit.
Oil advances – Most commodities were feeling a bit under the weather, but oil benchmarks were healthy enough to print some gains.
- U.S. crude oil up by 0.68% to $48.57 per barrel
- Brent crude oil up by 0.60% to $50.49 per barrel
There was no apparent catalyst for the slight yet broad commodities stumble. However, most commodities were in the green last week, so we may just be seeing some profit-taking. As for oil’s climb, market analysts attributed that to growing openness to OPEC’s plan to cut oil production.
Major Market Movers:
CAD – The Loonie was the one currency to rule them all during the morning London session. And Loonie bulls can probably thank the recovery in oil prices for that.
USD/CAD was down by 42 pips (-0.32%) to 1.3082, NZD/CAD was down by 35 pips (-0.24%) to 1.4700, GBP/CAD was down by 93 pips (-0.54%) to 1.6838
AUD – The modest signs of risk-taking likely buoyed the higher-yielding Aussie, since it was the second strongest currency of the session.
AUD/USD was up by 21 pips (+0.28%) to 0.7676, AUD/JPY was up by 24 pips (+0.31%) to 77.81, AUD/CHF was up by 16 pips (+0.21%) to 0.7458
GBP – The pound started the session by extending its losses, so it looked like Theresa May’s announcement that Article 50 of the TEU is still weighing down on the pound. After that, the pound tried to recover when the better-than-expected PMI reading came out.
However, there just weren’t enough pound bulls to stage a rally. There were more than enough bulls to cap the pound’s weakness, though, since the pound ended up trading sideways for the rest of the session. Still, the damage was already done, and so the pound ended up as the worst-performing currency of the session.
GBP/USD was down by 34 pips (-0.27%) to 1.2868, GBP/AUD was down by 85 pips (-0.51%) to 1.6766, GBP/CHF was down by 39 pips (-0.31%) to 1.2503
- 1:30 pm GMT: RBC’s Canadian manufacturing PMI (51.5 expected, 51.1 previous)
- 1:45 pm GMT: Markit’s final U.S. manufacturing PMI (no change from 51.4 expected)
- 2:00 pm GMT: U.S. construction spending (0.3% expected, 0.0% previous)
- 2:00 pm GMT: ISM’s U.S. manufacturing PMI (50.3 expected, 49.4 previous)
Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.
Head on to Big Pippin’s Daily Chart Art for some pip-locking technical weeks!