Article Highlights

  • Swiss retail sales y/y: 0.6% vs. -0.8% expected, -1.2% previous
  • Swiss manufacturing PMI: 58.6 vs. 58.0 expected, 57.8 previous
  • Spanish manufacturing PMI: 53.9 vs. 54.6 expected, 54.8 previous
  • Italian manufacturing PMI: 55.7 vs. 55.2 expected, 55.0 previous
  • French final manufacturing PMI: 53.3 vs. unchanged at 53.4 expected
  • German final manufacturing PMI: unchanged at 58.3 as expected
  • Euro Zone final manufacturing PMI: unchanged at 56.2 as expected
  • U.K. manufacturing PMI: 54.2 vs. 55.0 expected, 54.5 previous
  • Euro Zone jobless rate: 9.5% as expected vs. 9.6% previous
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The pound got slapped lower across the board during the session, thanks to the miss in the U.K.’s manufacturing PMI reading. Meanwhile, the Kiwi ended up as the one currency to rule them all.

Major Events/Reports:

U.K. manufacturing PMI dips – Markit released the U.K.’s manufacturing PMI reading for March earlier today. And, well, it dipped from 54.6 to 54.2, instead of improving to 55.0 expected.

March’s reading is still above the 50.0 neutral level, but it does mark the third consecutive month that the U.K.’s manufacturing PMI reading has eased.

Looking at the details of the report, the weaker reading was attributed to “the rate of increase in manufacturing production [easing] to its weakest during the current eight-month sequence of expansion.” Moreover, new orders growth also slowed. Despite the weaker readings for new orders and production, however, both “remain above long-term trends.”

Also worth noting is that the weakness in new order growth was likely because of weaker domestic demand. This is likely so because the PMI report noted that “the slowdown was centred on consumer goods producers.” Furthermore, overseas demand actually picked up the pace for the 10th consecutive month.

The weakness in domestic demand and higher overseas demand were both attributed to the pound’s depreciation in the wake of the Brexit referendum. After all, “The reduced buying power of the Pound has led to the 11th consecutive rise in input costs with consumers feeling the effects in the form of higher prices on the high street.”

Commodities rise, but precious metals tumble – Commodities are starting the week on an upbeat note because there was a broad-based rally going on. Unfortunately, precious metals got left behind.

Base metals were in the green.

  • Copper was up by 0.09%% to $2.655 per pound
  • Nickel was up by 0.50% to $10,072.50 per dry metric ton

Oil benchmarks were also in positive territory.

  • U.S. crude oil was up by 0.28% to $50.74 per barrel
  • Brent crude oil was up by 0.19% to $53.63 per barrel

Precious metals, meanwhile, got no love.

  • Gold was up down 0.31% to $1,241.20 per troy ounce
  • Silver was down by 0.48% to $18.168 per troy ounce

There was no direct catalyst for the broad-based commodities rally. Also, U.S dollar index was up slightly by 0.08% to 100.50 for the day when the session ended.

However, market analysts attributed the rise in oil prices to strong demand in Asia, although oil’s gains were capped by the resumption of oil production in Libya after armed protests disrupted oil production last week. Precious metals, meanwhile, were going against the bullish flow, likely because of the modest signs of risk-taking in Europe.

Mixed yet optimistic start in Europe – Europe started the new trading week a bit mixed. However, there were signs of risk-taking, since the majority of European equity indices were slightly in the green.

  • The pan-European FTSEurofirst 300 was up by 0.18% to 1,505.74
  • Germany’s DAX was up by 0.21% to 12,338.50
  • The blue-chip Euro Stoxx 50 was down by 0.09% to 3,492.50

Market analysts attributed the modest signs of risk-taking to higher oil prices, which gave energy shares a boost. Meanwhile, European banking shares were the main losers. There were no apparent catalysts, but it’s possible that last week’s theme, fading ECB rate hike expectations in particular, were weighing down on banking shares.

Major Market Mover(s):

GBP – The pound had a steady start but got rushed by sellers when the U.K.’s manufacturing PMI failed to meet expectations. There were positive points in the PMI report, such as exports picking up, which is likely why the pound tried to rally after the initial drop. Unfortunately for pound bulls, there were just more sellers today, and so the pound slipped lower again after that.

GBP/USD was down by 33 pips (-0.27%) to 1.2498, GBP/JPY was down by 52 pips (-0.37%) to 139.21, GBP/NZD was down by 70 pips (-0.39%) to 1.7852

NZD – Most kiwi pairs are actually range-bound for the day, if you consider the earlier price action as well. Also, price action on the Kiwi was a bit choppy during the session. Even so, the Kiwi was the one currency to rule them all, likely because of the commodities rally and modest signs of risk appetite.

NZD/USD was up by 10 pips (+0.14%) to 0.7001, NZD/CHF was up by 19 pips (+0.27%) to 0.7020, NZD/CAD was up by 27 pips (+0.29%) to 0.9341

Watch Out For:

  • 12:30 pm GMT: Canada’s manufacturing PMI (54.7 previous)
  • 1:45 pm GMT: Markit’s final U.S. manufacturing PMI (revision from 53.4 to 53.5 expected)
  • 2:00 pm GMT: ISM’s U.S. manufacturing PMI (57.2 expected, 57.7 previous)
  • 2:00 pm GMT: U.S. construction spending (1.0% expected, -1.0% previous)
  • 2:30 pm GMT: BOC business outlook survey results will be released
  • 7:00 pm GMT: Philadelphia Fed President Patrick Harker will speak