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Price action was a bit choppy during today’s morning London session. However, the euro was clearly on the back foot during the session.

The pound is also noteworthy since it’s mixed for the day but managed to give a good performance during the session, even though there were no apparent catalysts.

  • French flash manufacturing PMI: 55.4 vs. 54.6 expected, 54.8 previous
  • French flash services PMI: 55.9 vs. 56.6 expected, 56.9 previous
  • German flash manufacturing PMI: 58.3 vs. 59.1 expected, 59.6 previous
  • German flash services PMI:53.5 vs. 54.4 expected, 54.0 previous
  • Euro Zone flash manufacturing PMI: 56.8 vs. 57.3 expected, 57.4 previous
  • Euro Zone flash services PMI: 55.4 vs. 55.5 expected, 55.4 previous

Major Events/Reports

Euro Zone PMI miss

Markit released the latest batch of PMI readings for the Euro Zone as a whole, as well as a couple of major Euro Zone economies. And unfortunately, they all failed to meet expectations.

For the Euro Zone as a whole, flash manufacturing PMI came in 56.8, which is lower than the 57.3 consensus as well as the previous month’s 57.4.

Flash services PMI, meanwhile, came in at 55.4, which is a tick lower than the expected 55.5 and is unchanged from the June reading.

According to commentary from Markit, the weaker readings reflect “Growth of new orders, backlogs of work and employment all [edging] lower in July.”

However, Markit was quick to add that they all “remained solid” despite the weakness.

Commodities rally

Commodities are starting the week on a strong footing since they were broadly in the green during the morning London session.

Market analysts attributed the broad-based demand for commodities to the Greenback’s weakness last week. And it also probably helped that the U.S. dollar index was down by 0.04% to 93.74 for the day when the session ended.

Aside from that, oil likely got a boost when Saudi Energy Minister Khalid al-Falih said that Saudi Arabia is committed to lowering its crude oil exports to 6.6 million barrels per day in August, which is “almost 1 million bpd below levels a year ago,” according to Reuters.

Precious metals were up.

  • Gold was up by 0.14% to $1,256.60 per troy ounce
  • Silver was up by 0.28% to $16.503 per troy ounce

Base metals were in demand.

  • Copper was up by 0.46% to $2.735 per pound
  • Nickel was up by 0.63% to $9,607.50 per dry metric ton

Oil benchmarks did well enough but got a noticeable boost later.

  • U.S. WTI crude oil was up by 0.46% to $45.98 per barrel
  • Brent crude oil was up by 0.58% to $48.34 per barrel

Risk aversion persists

The risk-off vibes from the earlier Asian session spilled over into the European session since European equity indices were printing losses.

Market analysts blamed the persistent risk-off mood to the euro’s recent strength, which has weighed down on European exporters.

  • The pan-European FTSEurofirst 300 was down by 0.25% to 1,488.69
  • Germany’s DAX was down by 0.39% to 12,192.75
  • The blue-chip Euro Stoxx 50 was down by 0.11% to 3,448.50

U.S. equity futures are hinting that the risk-off vibes may carry over into the U.S. session.

  • S&P 500 futures were down by 0.10% to 2,469.88
  • Nasdaq futures were down by 0.13% to 5,913.38

Major Market Mover(s):

EUR

The euro was broadly in retreat during the session, very likely because of profit-taking after the euro’s good run last week, although the miss in PMI readings appeared to have an effect as well, which is a bit strange since Euro Zone PMI reports (most economic reports for that matter) are usually duds.

EUR/USD was down by 24 pips (-0.21%) to 1.1645, EUR/CHF was down by 23 pips (-0.21%) to 1.1021, EUR/AUD was down by 58 pips (-0.40%) to 1.4657

GBP

The pound is mixed for the day but it was the best-performing currency of the session. Aside from profit-taking by pound bulls after the pound’s poor performance last week, market analysts couldn’t really pinpoint the reason for the pound’s strength.

GBP/USD was up by 42 pips (+0.32%) to 1.3034, GBP/CHF was up by 32 pips (+0.26%) to 1.2337, GBP/NZD was up by 45 pips (+0.26%) to 1.7527

Watch Out For:

  • 12:30 pm GMT: Canadian wholesale sales (0.5% expected, 1.0% previous)
  • 1:00 pm GMT: CB’s Chinese leading index (1.3% previous)
  • 1:45 pm GMT: Markit’s flash U.S. manufacturing (52.3 expected, 52.0 previous) and services (54.3 expected, 54.2 previous) PMI
  • 2:00 pm GMT: U.S. existing home sales (5.59M expected, 5.62M previous)