Article Highlights

  • German Flash Manufacturing PMI: 55.1 vs. 54.4 forecast, 54.3 previous
  • German Flash Services PMI: 54.1 vs. 51.5 forecast, 50.9 previous
  • European Composite PMI: 53.7 vs. 52.8 forecast, 52.6 previous
  • European Services PMI: 53.5 vs. 52.4 forecast, 52.2 previous
  • European Manufacturing PMI: 53.3 vs. 52.7 forecast, 52.6 previous
  • U.K. CBI Industrial Trends: -17 vs. -5 forecast/previous
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Positive European PMI data and the outlook on U.K.’s export sector had the markets in risk-on mode during the morning London trading session.

Major Events/Reports:

Positive European PMI data – Great news for euro bulls in the morning London session as purchasing managers across Europe showed strong positive sentiment in both the manufacturing and services sector.  Germany lead the way as factory activity expanded at the fastest pace in three years, and we even saw France’s manufacturing PMI read tick above the 50 expansionary/contractionary level since the first quarter. Price action in the euro has been slow to start the week, but the rally seems to be gaining heading into U.S. trade.

U.K. Industrial Trends – We got a monthly read on the U.K.’s industrial trends this morning, with the CBI industrial trends survey coming in at a very disappointing -17 vs. -5 previous. It wasn’t all gloom and doom from the report as manufacturers were generally positive about the future outlook for exports thanks to the spike lower in Sterling since the Brexit vote.  This is likely the reason why we saw the British pound able to sustain the London session rally, despite an overall bad survey reading.

Positive risk sentiment to start the week – The positive PMI data had European equities on the upswing but it’s still a relatively quiet start to the week.

  • The pan-European FTSEurofirst 300 was up by 0.50% to 1,365.77
  • The blue-chip Euro Stoxx 50 was up by 0.91% to 3,105.55
  • The U.K.’s FTSE 100 was up 0.16% to 7,031.46
  • The DAX was up by 0.89% to 10,805.89

The risk-on sentiment was felt in U.S. pre-market trade as futures traded higher.

  • S&P 500 futures was up by 0.41% to 2,143.50
  • Nasdaq futures was up by 0.58% to 4,871.50

Oil dips lower – Oil benchmarks are ticking lower on the session, possibly on the most recent news of Iraq trying to resist the output cut.

  • U.S. WTI crude oil was down by 0.88% to $50.40 per barrel.
  • Brent blend crude oil was down by 0.50% to $51.52 per barrel.

Major Market Movers:

EUR – mostly gains for the combined currency this morning after a very positive set of PMI data:

EUR/CAD was up 19 pips (+0.14%) to 1.4535, EUR/USD was up 7 pips (+0.07%) to 1.0890, EUR/JPY was up 24 pips (+0.27%) to 113.28

CHF – without an apparent direct catalyst, the Swiss franc also seeing gains in the morning London session after lower trading in the Asia session, but mostly lower to start the week.

EUR/CHF was up 5 pips (+0.05%) to 1.0819, GBP/CHF was up 8 pips (+0.06%) to 1.2154, USD/CHF was up 3 pips (+0.03%) to .9936

GBP – The positive outlook on exports was able to put Sterling up across the board on the session.

GBP/USD was up 5 pips (+0.4%) to 1.2232, GBP/JPY was up 31 pips (+0.25%) to 127.25, EUR/GBP was down 8 pips (+0.09%) to .8901

Watch Out For:

  • 12:30 pm GMT: Canadian Wholesale Sales m/m (0.6% forecast, 0.3% previous)
  • 13:45 pm GMT: U.S. Flash Manufacturing PMI (51.5 forecast/previous)
  • 13:05 pm GMT: U.S. New York Fed President Dudley will give a speech
  • 11:10 pm GMT: U.S St. Louis Fed President Bullard will give a speech

See also:

Asian Session Forex Recap

U.S. Session Recap

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