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The European session was plagued by another round of tight trading conditions, with most currency pairs bound in tight ranges for the entire duration of the session.

The Swissy was noteworthy, though, since it got nudged broadly lower against its peers, even though risk aversion made a comeback during today’s morning London session.

The Aussie and the Kiwi were also noteworthy since they closed the session slightly higher, very likely because commodities were attempting to rally during the session.

  • French flash manufacturing PMI: 55.0 vs. 54.1 expected, 53.8 previous
  • French flash services PMI: 55.3 vs. 57.1 expected, 57.2 previous
  • German flash manufacturing PMI: 59.3 vs. 59.1 expected, 58.5 previous
  • German flash services PMI: 53.7 vs. 55.4 expected, same as previous
  • Euro Zone flash manufacturing PMI: 57.3 vs. 56.9 expected, 57.0 previous
  • Euro Zone flash services PMI: 54.7 vs. 56.2 expected, 56.3 previous
  • Canada’s CPI report coming up

Major Events/Reports

Mixed Euro Zone PMI readings

Earlier today, Markit released a bunch of PMI reports for the Euro Zone as a whole and for the Euro Zone’s major economies.

Focusing only on the PMI readings for the Euro Zone as a whole, the Euro Zone’s flash manufacturing PMI for the month of June improved further from 57.0 to 57.3 instead of deteriorating to 56.9 as expected.

Even better, this is the best reading in 74 months, which is just awesome. Sadly, however, the Euro Zone’s flash services PMI reading dropped hard from 56.3 to a five-month low of 54.7.

Despite the big drop in June’s services PMI reading, commentary from Markit remained upbeat. Specifically, Markit noted that:

“Although the PMI data point to some loss of growth momentum in June, the latest reading needs to be looked at in the context of recent elevated levels. Despite the June dip, the average expansion in the second quarter has been the strongest for over six years and is historically consistent with GDP growth accelerating from 0.6% in the first quarter to 0.7%.”

Commodities attempt to climb again

Commodities staged a broad-based recovery during yesterday’s morning London session. Unfortunately, that recovery ended when selling pressure returned during the U.S. session. That’s not stopping commodities from attempting another recovery during today’s morning London session, though.

Base metals were clearly outperforming.

  • Copper was up by 1.19% to $2.630 per pound
  • Nickel was up by 1.44% to $9,182.50 per dry metric ton

Precious metals did rather well as well.

  • Gold was up by 0.77% to $1,259.02 per troy ounce
  • Silver was up by 1.32% to $16.727 per troy ounce

Oil benchmarks were grudgingly in positive territory after wallowing in losses earlier.

  • U.S. WTI crude oil was up by 0.21% to $42.83 per barrel
  • Brent crude oil was up by 0.20% to $45.31 per barrel

The U.S. dollar index was down by 0.16% to 97.10 for the day when the session ended. And that, plus a week-long string of losses, may have stoked demand have attracted bargain hunters and/or enticed shorts to take some profits off the table to avoid weekend risk. And some market analysts have the same opinion (since there wasn’t really any other catalyst).

Risk aversion makes a comeback

Risk aversion got banished yesterday, at least in Europe. However, risk aversion reemerged during today’s morning London session, sending European equity indices lower.

  • The pan-European FTSEurofirst 300 was down by 0.42% to 1,521.50
  • Germany’s DAX was already down by 0.68% to 12,707.25
  • The blue-chip Euro Stoxx 50 was down by 0.70% to 3,532.50

Market analysts blamed the souring sentiment on the underwhelming performance of energy shares, thanks to oil’s earlier dip.

Major Market Mover(s):

CHF

Despite the risk-off vibes, the safe-haven Swissy ended up being the worst-performing currency of the session. It could have just been a fluke since price action was actually choppy. However, it’s also possible that the SNB was using the quiet trading conditions to sneakily weaken the Swissy.

USD/CHF was up by 12 pips (+0.12%) to 0.9714, EUR/CHF was up by 17 pips (+0.16%) to 1.0853, GBP/CHF was up by 31 pips (+0.26%) to 1.2363

 

AUD & NZD

The higher-yielding Aussie and Kiwi fared well enough, even though risk aversion was the name of the game. And Aussie and Kiwi bulls can probably thank the broad-based rise in commodity prices during the session for that.

NZD/USD was up by 8 pips (+0.11%) to 0.7283, NZD/CHF was up by 14 pips (+0.20%) to 0.7075, NZD/CAD was up by 25 pips (+0.26%) to 0.9637

AUD/USD was up by 11 pips (+0.16%) to 0.7568, AUD/CAD was up by 29 pips (+0.29%) to 1.0014, AUD/CHF was up by 17 pips (+0.24%) to 0.7352

Watch Out For:

  • 12:30 pm GMT: Canada’s headline CPI (+0.2% expected, +0.4% previous); read Forex Gump’s write-up on that here
  • 1:45 pm GMT: Markit’s flash U.S. manufacturing PMI (53.1 expected, 52.7 previous)
  • 1:45 pm GMT: Markit’s flash U.S. services PMI (53.9 expected, 53.6 previous)
  • 2:00 pm GMT: U.S. new home sales (599K expected, 569K previous)
  • 3:15 pm GMT: St. Louis Fed President James Bullard is scheduled to speak
  • 4:40 pm GMT: Cleveland Fed President Loretta Mester will speak
  • 6:15 pm GMT: U.S. Fed Governor Jerome Powell will give a speech