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The Swissy had a good run, even though risk appetite was the more dominant sentiment in today’s morning London session. Meanwhile, the Aussie and the Kiwi fared rather poorly, likely because of the commodities rout.

Another currency worth noting is the pound since it jumped higher when the U.K.’s manufacturing PMI exceeded expectations. However, later selling pressure meant that the pound ended up mixed for the session.

And while it had a mixed performance during the session, the Greenback is also noteworthy since it switched to recovery mode after it found buyers across the board about halfway through the session. No clear reason why, but ISM’s PMI report is coming up later, so preemptive positioning and/or unwinding are certainly possible.

  • U.K. Nationwide HPI m/m: 0.3% vs. 0.2% expected, 0.3% previous
  • Australian commodity prices y/y: 17.1% vs. 23.7% previous
  • Spanish manufacturing PMI: 54.0 vs. 54.9 expected, 54.7 previous
  • Italian manufacturing PMI: 55.1 vs. 55.2 expected, 55.2 previous
  • French final manufacturing PMI: 54.9 vs. 55.4 expected, 55.4 previous
  • German final manufacturing PMI: 58.1 vs. 58.3 expected, 58.3 previous
  • Euro Zone final manufacturing PMI: 56.6 vs. 56.8 expected, 56.8 previous
  • U.K. manufacturing PMI: 55.1 vs. 54.4 expected, 54.2 previous
  • Euro Zone Q2 GDP q/q: 0.6% as expected, 0.6% previous
  • Euro Zone Q2 GDP y/y: 2.1% as expected, 1.9% previous

Major Events/Reports

U.K. manufacturing PMI rises

Markit released the latest manufacturing PMI report for U.K. earlier today. And fortunately for the U.K., the headline reading for the month of July came in at 55.1, which is better than the consensus of a 54.4 figure.

The rebound effectively puts an end to three months of ever poorer readings. But on a slightly more downbeat note, the previous reading was downgraded a bit from 54.3 to 54.2.

Anyhow, commentary from Markit noted that the rebound was due to “a significant boost from the trend in new export business, as foreign demand rose at the second-strongest rate in the series history, beaten only by that recorded in April 2010.”

Moreover, job creation in July “was among the best registered over the past three years.”

On a more downbeat note for future inflation, “Input prices rose at the slowest pace in over a year, and to a significantly lesser extent than the survey-record increase seen in January.”

Even so, companies continue to pass on higher input costs to customers, so “Output charges rose for the fifteenth consecutive month.”

Commodities crumble

Commodities were in the green during the earlier Asian session but they erased their gains and were broadly in the red by the end of today’s morning London session.

The early commodities rally was attributed by market analysts to the Greenback’s overall weakness (at the time) and positive Chinese data.

The Greenback did stage a broad-based recovery during the morning London session, though, which may have been the catalyst for the commodities slide.

And for reference, the U.S. dollar index was up by 0.15% to 92.81 for the day when the session ended.

Precious metals were down.

  • Gold was down by 0.07% to $1,265.69 per troy ounce
  • Silver was down by 0.31% to $16.734 per troy ounce

Base metals got hammered.

  • Copper was down by 0.33% to $2.882 per pound
  • Nickel was down by 0.22% to $10,200.00 per dry metric ton

Oil benchmarks were sinking.

  • U.S. WTI crude oil was down by 0.44% to $49.95 per barrel
  • Brent crude oil was down by 0.45% to $52.49 per barrel

Upbeat day in Europe today

Risk-taking was apparently the more dominant sentiment in Europe during today’s morning London session since the major European equity indices were raking in some gains.

Oil was actually down during the session, but market analysts pointed out that oil companies were reporting positive earnings results, which allowed them to outperform together with banking shares. And the boost on these two sectors apparently helped to improve overall risk sentiment in Europe.

  • The pan-European FTSEurofirst 300 was up by 0.45% to 1,491.35
  • Germany’s DAX was up by 0.35% to 12,161.25
  • The blue-chip Euro Stoxx 50 was up by 0.24% to 3,461.50

U.S. equity futures were also doing well.

  • S&P 500 futures were up by 0.21% to 2,473.25
  • Nasdaq futures were up by 0.35% to 5,902.88

Major Market Mover(s):

CHF

Quite intriguingly, the Swissy was the best-performing currency, even though risk appetite was the more dominant sentiment during the European session.

There’s no clear reason for the Swissy’s strength but profit-taking by Swissy shorts after last week’s (and yesterday’s) severe Swissy weakness is a possibility.

USD/CHF was down by 13 pips (-0.14%) to 0.9667, EUR/CHF was down by 25 pips (-0.22%) to 1.1418, GBP/CHF was down by 25 pips (-0.19%) to 1.2765

AUD & NZD

Despite the risk-on vibes, the higher-yielding Aussie and Kiwi both failed to find support and extended their losses from the earlier session.

The commodities rout is the most likely reason why the two comdolls suffered. Although it’s possible that the Aussie was still reeling from the RBA statement while Kiwi bulls were taking profits off the table ahead of the dairy auction later.

AUD/USD was down by 23 pips (-0.29%) to 0.7978, AUD/CHF was down by 31 pips (-0.40%) to 0.7714, AUD/CAD was down by 32 pips (-0.32%) to 0.9959

NZD/USD was down by 22 pips (-0.29%) to 0.7473, NZD/CHF was down by 30 pips (-0.40%) to 0.7225, NZD/CAD was down by 32 pips (-0.34%) to 0.9328

 GBP

The pound jumped higher across the board when the U.K.’s manufacturing PMI came in better-than-expected. However, lack of follow-through buying and signs of selling pressure resulted in the pound having a mixed performance for the session, but still a net winner overall.

GBP/JPY was up by 25 pips (+0.17%) to 145.87, GBP/AUD was up by 36 pips (+0.22%) to 1.6547, GBP/NZD was up by 39 pips (+0.23%) to 1.7666

Watch Out For:

  • 12:30 pm GMT: U.S. core PCE price index (0.1% expected, same as previous), U.S. personal spending (0.1% expected, same as previous), U.S. personal income (0.4% expected, same as previous)
  • 1:30 pm GMT: Markit’s Canadian manufacturing PMI (54.7 previous)
  • 1:45 pm GMT: Markit’s final U.S. manufacturing PMI (no change from 53.2 expected)
  • 2:00 pm GMT: ISM’s U.S. manufacturing PMI (56.4 expected, 57.8 previous)
  • 2:00 pm GMT: U.S. construction spending (0.4% expected, 0.0% previous)
  • Dairy auction currently underway (+0.2% previous); auction usually ends at around 2:00 pm GMT