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Today’s morning London session was rather choppy, with many pairs trading sideways throughout the session. However, the pound was a very clear exception since it jumped higher across the board when the U.K.’s manufacturing PMI reading beat expectations.

  • Spanish manufacturing PMI: 54.5 vs. 54.3 expected vs. 53.9 previous
  • Swiss manufacturing PMI: 57.4 vs. 58.2 expected, 58.6 previous
  • Italian manufacturing PMI: 56.2 vs. 55.9 expected, 55.7 previous
  • French final manufacturing PMI: unchanged at 55.1 as expected
  • German final manufacturing PMI: unchanged at 58.2 as expected
  • Euro Zone final manufacturing PMI: 56.7 vs. unchanged at 56.8 expected
  • U.K. manufacturing PMI: 57.3 vs. 54.0 expected, 54.2 previous
  • Euro Zone jobless rate: 9.5% vs. 9.4% expected, 9.5% previous

Major Events/Reports:

U.K. manufacturing PMI beats expectations

Another month, another batch of U.K. PMI reports from Markit. And earlier today, Markit released the U.K.’s April manufacturing PMI report. And instead of dipping slightly from 54.2 to 54.0, the PMI reading came in at rockin’ 57.3 instead. Awesome! In addition, the most recent reading happens to be a three-year high, which is even more awesome (awesomer?).

Commentary from Markit attributed the jump to “Rates of expansion in output, total new orders and new export work all [gathering] pace, underpinned by robust business confidence and driving further job creation.”

Additional commentary noted that the U.K. manufacturing sector saw the “strongest inflows of new work since January 2014.” Moreover, “There were also reports of a solid increase in new export business, reflecting a combination of stronger global market conditions and the historically weak sterling exchange rate.” Foreign demand came mainly from “clients in North America, Europe, Africa and Brazil.”

Moreover, “Manufacturers continued to pass on higher costs to clients, leading to a further increase in average output charges.” And that will likely result in higher inflation down the road.

Commodities in rally mode

Commodities were broadly on the rise during the morning London session.

Oil benchmarks were in positive territory.

  • U.S. crude oil was down by 0.59% to $49.13 per barrel
  • Brent crude oil was down by 0.83% to $51.95 per barrel

Precious metals were well-supported, despite the risk-on vibes.

  • Gold was down by 0.12% to $1,256.98 per troy ounce
  • Silver was down by 0.76% to $16.970 per troy ounce

Base metals were mixed but mostly in the green.

  • Tin was up by 0.15% to $19,967.50 per dry metric ton
  • Zinc was up by 0.85% to $2,653.50 per dry metric ton

Some risk-taking in Europe

European equity indices were broadly in the green during today’s morning London session.

  • The pan-European FTSEurofirst 300 was up by 0.34% to 1,522.71
  • Germany’s DAX was up by 0.15% to 12,456.75
  • The blue-chip Euro Stoxx 50 was up by 0.24% to 3,568.-0

Market analysts attributed the general appetite for risk to strong corporate earnings reports for European companies. Other than that, energy shares were performing rather well, so the rise in oil prices also likely helped to improve risk sentiment.

Major Market Mover(s):

GBP

The pound had a mixed start but was mostly weaker, as renewed Brexit-related jitters continued to fester, thanks to a leaked account of the last Wednesday’s dinner between inner last Wednesday between U.K. Prime Minister, Theresa May, and top E.U. officials, including European Commission President Jean-Claude Juncker, wherein May and the E.U. officials supposedly failed to see eye-to-eye.

No worries, though, since the pound found lots of buyers when the U.K.’s manufacturing PMI report was released. Pound bears initially tried to sell into the pound rally, but pound bulls just trampled on them and continued to charge higher.

GBP/USD was up by 40 pips (+0.32%) to 1.2910, GBP/JPY was up by 53 pips (+0.37%) to 144.92, GBP/CHF was up by 46 pips (+0.36%) to 1.2847

Watch Out For:

  • 10:45 pm GMT: New Zealand’s quarterly jobless rate (5.1% expected, 5.2% previous)employment change (0.8% expected, same as previous), and labor cost index (0.5% expected, 0.4% previous)
  • Dairy auction currently underway (+3.1% previous); auction usually ends at around 2:00 pm GMT