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The pound jumped higher across the board when the latest U.K. retail sales report surprised to the upside. The pound wasn’t the top currency, though, since the top spot actually goes to the Swissy.

The Loonie, meanwhile, was under bearish pressure, likely because of the slide in oil prices.

  • German final GDP q/q: unchanged at 0.3% as expected
  • German GFK consumer climate: 10.7 vs. 10.8 expected, 10.8 previous
  • French business survey: 109.0 vs. 108.0 expected, 109.0 previous
  • U.K. retail sales m/m: 1.6% vs. 0.8% expected, -1.1% previous
  • U.K. retail sales y/y: 1.4% vs. 0.1% expected, 1.3% previous

Major Events/Reports:

Italy-related update

After being appointed as the next Italian Prime Minister yesterday, Giuseppe Conte announced that he will meet with the leaders of the Italian parties later today, likely in order to come up with a list of ministers.

And most market players are focused on who the next economic minister would be.

The League has already confirmed that they want Paulo Savona, who’s vehemently anti-euro, to be the economic minister.

However, La Stampa newspaper also claims that Luigi Zingales, a more moderate character, is also a top pick and will likely be backed by he 5-Star Movement.

U.K. retail sales impress

The U.K.’s April retail sales report was released earlier and it was rather impressive.

As for details, the report showed that retail sales volume in the U.K. spiked by 1.6% month-on-month, which is double the consensus reading of +0.8%.

In addition, the previous month’s reading was revised slightly from -1.2% to -1.1%.

And this means that retail sales for all of Q1 fell by 0.4%, which is a slightly softer slide compard to the previous 0.5% drop and may translate to an upward revision for Q1 GDP.

Moving on, retail sales volume in the U.K. increased by 1.4%, which is very good since the market was only expected a measly 0.1% annual increase.

ECB’s meeting minutes

The ECB released the minutes of their most recent monetary policy huddle late into the session.

And after reading quickly through the minutes, most of the stuff in the minutes appear to have already been discussed during the ECB presser.

The minutes, for example, noted that:

“Recent data and survey results pointed to some moderation in the pace of growth since the start of the year, but were so far considered to remain consistent with a solid and broad-based expansion.”

“[I]t was widely felt that uncertainty surrounding the outlook had increased and caution was seen as warranted in interpreting recent developments, also because the moderation in growth appeared to be broad-based across countries and sectors.”

Well, the ECB Overlord Draghi had this to say during the presser:

“Following several quarters of higher than expected growth, incoming information since our meeting in early March points towards some moderation, while remaining consistent with a solid and broad-based expansion of the euro area economy.”

“It’s quite clear that since our last meeting, broadly all countries experienced, to different extents of course, some moderation in growth or some loss of momentum.”

Pretty similar, yeah?

The ECB also reiterated that the source of downside risks for the Euro Zone are external. To quote directly from the minutes:

“[W]hile risks surrounding the euro area growth outlook remained broadly balanced, it was acknowledged that risks related to global factors, including the threat of increased protectionism, had become more prominent and warranted monitoring with regard to their implications for the medium-term outlook for growth and prices.”

And if you can still remember, Draghi was asked about the euro during the ECB presser and Draghi shrugged off the question by saying the following:

“[T]he exchange rate stabilised and recent volatility is less. So it was not discussed.”

Well, the minutes shed more light on that, as follows:

“In foreign exchange markets, volatility remained close to record low levels. Some market participants saw technical factors as having contributed to the broad stabilisation of the US dollar, in particular the cost of hedging. Mr Cœuré noted that the stability of exchange rates also suggested that investors did not appear to have materially changed their views on the euro area or US economic outlook.”

Other than that, a big issue during the presser was the ECB’s plans for its QE program and the ECB’s plans for the June meeting. And unfortunately, the minutes didn’t really provide any details on those.

Oil slumps as other commodities gain

Commodities were broadly on the rise during the morning London session. Not all commodities were in the green, however, since oil benchmarks were taking hits.

Commodities may have been in demand because of the Greenback’s relative weakness. And for reference, the U.S. dollar index was down by 0.16% to 93.76 for the day when the session ended.

As to why oil benchmarks were down in the dumps, market analysts blamed that on the rise in U.S. oil inventories and speculation that OPEC may raise oil output.

Precious metals were in the green.

  • Gold was up by 0.49% to $1,295.90 per troy ounce
  • Silver was up by 0.88% to $16.550 per troy ounce

Base metals were in demand.

  • Copper was up by 0.31% to $3.080 per pound
  • Nickel was up by 0.12% to $14,585.00 per dry metric ton

Oil benchmarks were going in the opposite direction.

  • U.S. WTI crude oil was down by 0.67% to $71.36 per barrel
  • Brent crude oil was down by 1.12% to $78.91 per barrel

Fading risk appetite in Europe

The major European equity indices had a strong start and then proceeded to rake in even more gains, which is sign that risk appetite prevailed. However, it soon became apparent that risk aversion was creeping back into Europe since the major European equity indices began surrending their gains, with many already in the red by the end of the session.

Market analysts attributed the earlier risk-on vibes to demand for financial and tech stocks. As for the later risk-off vibes, it’s not yet very clear. However, market analysts were already noting early on that auto shares had a tough time, likely because of Trump’s recent actions.

  • The pan-European FTSEurofirst 300 was down by 0.06% to 1,538.05
  • Germany’s DAX was down by 0.30% to 12,937.45
  • The blue-chip Euro Stoxx 50 was down by 0.01% to 3,541.45

U.S. equity futures were also in negative territory.

  • S&P 500 futures were down by 0.12% to 2,727.50
  • Nasdaq futures were down by 0.06% to 6,952.75

Major Market Mover(s):

GBP

The pound caught a bid when the U.K.’s retail sales report surprised to the upside. There was little follow-through buying, though, so the Swissy was able to outpace the pound and the pound had to content itself with second place.

GBP/USD was up by 42 pips (+0.31%) to 1.3403, GBP/NZD was up by 63 pips (+0.33%) to 1.9375, GBP/AUD was up by 78 pips (+0.45%) to 1.7744

CHF

The Swissy was the one currency to rule them all during the morning London session, likely because of safe-haven demand for the Swissy due to the political uncertainty in Italy and the returning risk-off vibes in Europe.

USD/CHF was down by 35 pips (-0.36%) to 0.9904, CAD/CHF was down by 52 pips (-0.67%) to 0.7686, AUD/CHF was down by 37 pips (-0.49%) to 0.7481

CAD

The Loonie was the worst-performing currency of the session, likely because of the slide in oil prices.

USD/CAD was up by 42 pips (+0.32%) to 1.2887, GBP/CAD was up by 108 pips (+0.63%) to 1.7272, EUR/CAD was up by 43 pips (+0.29%) to 1.5095

Watch Out For:

  • 12:30 pm GMT: U.S. initial jobless claims (220K expected vs. 222K previous)
  • 12:30 pm GMT: Canadian corporate profits (-1.9% previous)
  • 1:00 pm GMT: U.S. HPI (0.5% expected vs. 0.6% previous)
  • 2:00 pm GMT: U.S. existing home sales (5.56M expected vs. 5.60M previous)
  • 2:35 pm GMT: Atlanta Fed President Raphael Bostic will give a short speech
  • 5:00 pm GMT: BOE Guv’nah Mark Carney will speak