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The European currencies fought bitterly for the honor of being the one currency to rule them all during the morning London session session, with the euro ultimately emerging victorious. Meanwhile, yen bulls got roasted as the risk-on vibes applied some bearish BBQ sauce, er, I meant bearish pressure on the yen.

As for the other currencies, the Greenback was mixed while the comdolls were showing some weakness, very likely because of the commodities slide.

  • Spanish unemployment change: -129.3K vs.-78.2K expected, -48.6K previous
  • Spanish services PMI: 57.8 vs. 57.7 expected, 57.4 previous
  • Italian services PMI: 56.2 vs. 53.7 expected, 52.9 previous
  • French final services PMI: 56.7 vs. unchanged at 57.7 expected
  • German final services PMI: 55.4 vs. unchanged at 54.7 expected
  • Euro Zone final services PMI: 56.4 vs. 56.3 expected, 56.2 previous
  • U.K. services PMI: 55.8 vs. 54.6 expected, 55.0 previous
  • U.K. net lending to individuals: 4.7B vs. 4.5B expected, 4.9B previous
  • Mortgage approvals in the U.K.: 67K as expected vs. 68K previous
  • Euro Zone retail sales: 0.3% vs. 0.1% expected, 0.5% previous
  • U.K. elections underway
  • U.S. healthcare vote later

Major Events/Reports:

U.K. services PMI exceeds expectations

The U.K.’s April services PMI report, the last in this month’s batch of PMI reports from Markit, got released earlier today.

And it was great because the reading jumped from 55.0 to a four-month high of 55.8 instead of sliding to 54.6 as expected.

Commentary from Markit noted that “new business growth gained further momentum, with the pace of expansion the strongest so far this year and the second-fastest since the summer of 2015.”

And while employment growth in the service sector was only “modest“, it still is “one of the fastest rates of expansion seen over the past 12 months.”

Macron deemed the winner (in the presidential debate)

According to practically every mainstream media outlet, centrist candidate Emmanuel Macron, who is viewed as the upholder of the status quo and preserver of the EU, was the winner of the French presidential debate ahead of this Sunday’s second round of the French presidential elections.

And I do mean every mainstream media outlet. There were even reports declaring Macron as a the winner that were released during the session by the likes of The Guardian, Bloomberg, the BBC, and Reuters (among others).

And most media outlets kept highlighting the widely-cited snap poll conducted by Elabe for BFMTV, which showed that Macron was viewed by 63% of the people polled as being the more convincing candidate in the debate.

The results of an opinionway poll were also released during the session, and it showed that Macron’s lead against Le Pen widened a bit from 60-40 in favor of Macron to 61-39, cementing the narrative that Macron is set to be the next president of France.

Commodities gutted

Commodities were broadly and sharply in retreat during the morning London session.

Oil benchmarks were bleeding out a lot.

  • U.S. crude oil was down by 1.13% to $47.28 per barrel
  • Brent crude oil was down by 1.04% to $50.26 per barrel

Precious metals took hits.

  • Gold was down by 1.10% to $1,234.79 per troy ounce
  • Silver was down by 0.21% to $16.511 per troy ounce

Base metals got torpedoed (and then machine gunned).

  • Copper was down by 0.77% to $2.524 per pound
  • Nickel was down by 1.87% to $9,070.00 per dry metric ton

Interestingly enough, the U.S. dollar index was actually down by 0.23% to 99.03 for the day when the session ended. And yet commodities tanked rather hard. But then again, the Greenback’s price action is actually mixed – it just so happens that the euro, which has a weight of around 60%, was in rally mode, dragging the U.S. dollar index lower.

Anyhow, market analysts blamed the commodities slump on sentiment spillover from the hard slump in metals, base metals in particular. And the slide in base metals was due to demand worries in China amid disappointing Chinese PMI reports and the liquidity crunch in China because of the regulatory crackdowns by the Chinese government.

Other than that, some market analysts also tried to blame the hard drop in oil prices on the lower-than-expected decrease in U.S. oil inventories yesterday. Although news from the Kremlin that Russia is not yet committed to joining an extension of OPEC’s oil cut deal may have been a factor as well.

Lots of risk-taking in Europe

Most European equity indices were in rally mode during the morning London session, indicating that risk appetite was clearly the dominant sentiment.

  • The pan-European FTSEurofirst 300 was up by 0.58% to 1,536.99
  • Germany’s DAX was up by 0.89% to 12,639.00
  • The blue-chip Euro Stoxx 50 was up by 0.98% to 3,618.50

U.S. equity futures even got a bullish boost as well.

  • S&P 500 futures were up by 0.30% to 2,390.50
  • Nasdaq futures were up by 0.34% to 5,632.25

Market analysts attributed the very upbeat mood in Europe to high expectations that status quo candidate Macron would beat anti-EU Le Pen in the second round of the French Presidential elections.

Other market analysts, meanwhile, pointed to strong earnings reports for European companies.

Major Market Mover(s):

EUR & CHF

The euro was clearly the top dog of the session while the Swissy managed to edge out a win against the pound and came in at second place. Some market analysts were pointing to positive economic reports for the Euro Zone.

However, it’s much more likely that expectations that Macron is going to win this Sunday was more of a factor for the euro’s strength. After all, mainstream media outlets launched a media offensive during the session that highlighted Macron’s supposed win in the French Presidential debates.

Expectations of a Macron victory also helps to explain why the safe-haven Swissy was in demand despite the risk-on vibes during the session, since a stable Euro Zone would also be good for Switzerland. After all, Switzerland exports mainly to the Euro Zone, Germany and France in particular.

EUR/USD was up by 41 pips (+0.38%) to 1.0924, EUR/CHF was up by 17 pips (+0.16%) to 1.0845, EUR/GBP was up by 10 pips (+0.12%) to 0.8479

USD/CHF was down by 21 pips (-0.22%) to 0.9926, AUD/CHF was down by 18 pips (-0.25%) to 0.7346, NZD/CHF was down by 16 pips (-0.24%) to 0.6811

GBP

The pound got a bullish injection right from the start, probably because of preemptive positioning ahead of the U.K.’s services PMI report since the better-than-expected U.K. services PMI reading actually attracted some sellers. More buyers began jumping in later, though, sending the pound higher.

GBP/USD was up by 35 pips (+0.28%) to 1.2883, GBP/JPY was up by 62 pips (+0.43%) to 1145.43, GBP/CAD was up by 40 pips (+0.23%) to 1.7687

JPY

The yen was the worst-performing currency of the session, very likely because of the prevalence of risk-taking. The yen later began to close the gaps against the comdolls, but was never able to fully recover and ended up at the bottom of the heap. Although the yen’s fortunes may change (or not) in the upcoming session.

USD/JPY was up by 16 pips (+0.15%) to 112.87, CHF/JPY was up by 43 pips (+0.38%) to 113.70, CAD/JPY was up by 17 pips (+0.20%) to 82.21

Watch Out For:

  • 12:30 pm GMT: Canada’s trade balance ($0.3B expected, -1.0B previous)
  • 12:30 pm GMT: U.S. jobless claims (246K expected, 257K previous)
  • 12:30 pm GMT: U.S. trade balance (-$44.9B expected, -$43.6B previous)
  • 12:30 pm GMT: U.S. preliminary non-farm productivity (0.1% expected, 1.3% previous) and labor costs (2.5% expected, 1.7% previous)
  • 2:00 pm GMT: U.S. factory orders (0.6% expected, 1.0% previous)
  • 4:30 pm GMT: ECB Overlord Draghi has a speech
  • 8:25 pm GMT: BOC Governor Stephen Poloz will speak