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The pound jumped higher across the board and claimed the top spot after the U.K.’s latest services PMI reading managed to beat expectations.

The comdolls, meanwhile, were in a race to the bottom, with the Loonie getting the worst of as oil prices fell.

  • French budget balance: -€54.3B vs. -€33.1B previous
  • Spanish services PMI: 56.4 as expected vs. 55.6 previous
  • Italian services PMI: 53.1 vs. 52.9 expected, 52.6 previous
  • French final services PMI: unchanged at 54.3 as expected
  • German final services PMI: unchanged at 52.1 as expected
  • Euro Zone services PMI: 53.8 vs. no change from 53.9 expected
  • U.K. services PMI: 54.0 vs. 53.0 expected, 52.8 previous
  • Euro Zone retail sales m/m: 0.1% vs. 0.5% expected, 0.1% previous

Major Events/Reports:

U.K. services PMI

Markit’s May U.K. services PMI report was released earlier today. And it revealed that the services PMI reading jumped from 52.8 to a three-month high of 54.0, beating expectations that it would only improve to 53.0.

Commentary from Markit wasn’t too upbeat, though, since Markit found that “new business volumes continued to rise at a relatively subdued rate.”

And according to survey respondents, “Brexit-related uncertainty remained a key factor holding back decision making among clients.”

Employment growth was also not so impressive, since the “latest increase in service sector employment numbers was the second-weakest since March 2017.”

On a more upbeat note, input price inflation continued to rise, driven mainly by “combination of rising salary payments and greater fuel bills,” which is good news for wage growth.

Unfortunately, Markit also found that companies in the service sector were reluctant to pass on their higher input costs. In fact, “the rate of charge inflation eased for the second month running to its weakest since June 2017.”

And some survey respondents explained that “competitive pressures and the need to stimulate demand through promotional discounting had constrained their pricing power.”

Italian PM Conte speaks

Giuseppe Conte, the new Italian Prime Minister, gave his inaugural speech before the Italian Parliament earlier.

And, well, he basically reiterated all the objectives and promises that were outlined in the 5-Star Movement and the League’s joint manifesto.

Conte therefore proudly boasted that “The truth is that we have brought with us radical change, of which we are proud.”

He also took a stab at his detractors when he said the following:

“The political forces that make up this government have been accused of being ‘populist’ and ‘anti-system’ … If ‘populism’ means the ruling class listens to the needs of the people … (and) if ‘anti-system’ means to aim to introduce a new system, which removes old privileges and encrusted power, well these political forces deserve both these epithets.”

Conte also stressed that his government rejects austerity:

“We want to reduce the public debt, but we want to do it by increasing our wealth, not with austerity that, in recent years, has helped to make it (public debt) grow.”

Conte also highlighted the new government’s plan to reform the tax system by introducing a “flat tax”.

“The goal is the ‘flat tax’, which is a reform with fixed tax brackets and a system of deductions that guarantees the progressiveness of the levy in full harmony with the principles of the constitution.”

Conte also reiterated that his government will bring down the hammer on illegal immigrants. He did stress that he and his government are not racists, though.

“We will end the immigration business, which has grown out of all proportion under the cloak of fake solidarity.”

“We are not and will never be racists. We want procedures that determine refugee status to be certain and speedy, in order to effectively guarantee their (refugee) rights.”

Conte did raise a possible point of conflict with the E.U. when he said that:

“In Europe, these issues will be strongly pushed forward with the aim of changing its governance, a change already at the centre of reflection and discussion in all EU member states.

“We are optimistic about the outcome of these discussions and confident of our negotiating power, because we are facing a situation in which Italy’s interests … coincide with the general interests of Europe, with the aim of preventing its possible decline. Europe is our home.”

Mexico imposes tariffs against U.S. goods

Mexico threatened to slap retaliatory tariffs last week after the U.S. announced that it will push through with its planned tariffs on aluminum and steel imported from the E.U., Canada, and Mexico.

Well, those threats became reality earlier since Mexico’s economy minister announced that Mexico will slap 15-20% in tariffs against U.S. steel and certain agricultural products.

Oil-related rumor

According to a report from Bloomberg that (as usual) cited unnamed “people familiar with the matter,” the U.S. supposedly requested Saudi Arabia and “some other OPEC producers” to ramp up oil output “by about 1 million barrels a day.”

The unnamed sources also claimed that Arab oil ministers discussed the U.S. request over the weekend. And an earlier statement from OPEC seems to validate this rumor, namely OPEC’s Sunday statement that “emphasized the need for healthy market conditions that stimulate adequate investments in the energy sector, in order to ensure stable oil supplies are made available in a timely manner to meet growing demand and offset declines in some parts of the world.”

Commodities broadly weaker

Commodities staged a broad-based retreat during the morning London session. Although many base metals were able to push back against the bearish tide.

Precious metals were likely in retreat because of the risk-on vibes in Europe. After all, precious metals are considered as traditional safe-havens.

Oil prices, meanwhile, were under pressure because of the OPEC-related rumor, market analysts say.

As to why some base metals were able to fight back, there’s no clear reason for that. Although some market analysts said that copper was in demand because of supply-related concerns.

Precious metals were in retreat.

  • Gold was down by 0.19% to $1,294.80 per troy ounce
  • Silver was down by 0.25% to $16.390 per troy ounce

Oil benchmarks were also in the red.

  • U.S. WTI crude oil was down by 0.53% to $64.41 per barrel
  • Brent crude oil was down by 1.65% to $74.05 per barrel

Base metals were mixed, but many were able to fight back against the bearish tide.

  • Copper was up by 0.25% to $3.142 per pound
  • Zinc was up by 1.34% to $3,158.00 per dry metric ton

More risk-taking in Europe

The major European equity indices opened mostly lower. However, it soon became apparent that the feel-good vibes from yesterday didn’t really go away since the major European equity indices were able to recover from losses and then some.

And according to market analysts, the risk-on vibes were sustained because of strong demand for tech shares, which helped to improve overall risk sentiment.

  • The pan-European FTSEurofirst 300 was up by 0.45% to 1,524.33
  • Germany’s DAX was up by 1.16% to 12,918.12
  • The blue-chip Euro Stoxx 50 was up by 0.71% to 3,495.05

U.S. equity futures were also well-supported.

  • S&P 500 futures were up by 0.15% to 2,749.75
  • Nasdaq futures were up by 0.28% to 7,168.75

Major Market Mover(s):


The pound shot higher across the boar early on, thanks to the better-than-expected reading for the U.K.’s latest services PMI. Follow-through buying was only limited, though, probably because the details of the PMI report were not too upbeat.

Even so, the early boost allowed the pound to close out the session in first place.

GBP/USD was up by 31 pips (+0.23%) to 1.3358, GBP/CAD was up by 127 pips (+0.74%) to 1.7347, GBP/AUD was up by 93 pips (+0.54%) to 1.7538


All the comdolls (CAD, NZD, AUD) were feeling some bearish pressure during the morning London session, likely because of the slide in commodity prices.

The Loonie was under extra pressure, though, likely because of the slide in oil prices and/or because the risk-on vibes helped to dampen selling pressure on the higher-yielding Kiwi and Aussie.

USD/CAD was up by 64 pips (+0.50%) to 1.2985, AUD/CAD was up by 19 pips (+0.20%) to 0.9890, NZD/CAD was up by 17 pips (+0.19%) to 0.9112

NZD/USD was down by 21 pips (-0.31%) to 0.7017, NZD/JPY was down by 27 pips (-0.35%) to 77.02, NZD/CHF was down by 29 pips (-0.43%) to 0.6920

AUD/USD was down by 22 pips (-0.29%) to 0.7617, AUD/JPY was down by 28 pips (-0.34%) to 83.59, AUD/CHF was down by 31 pips (-0.42%) to 0.7510

Watch Out For:

  • 12:30 pm GMT: Canadian labor productivity (0.3% expected, 0.2% previous)
  • 1:45 pm GMT: Markit’s final U.S. services PMI (no change from 55.7 expected)
  • 2:00 pm GMT: ISM’s U.S. non-manufacturing PMI (57.6 expected, 56.8 previous)
  • 2:00 pm GMT: JOLTS U.S. job openings (6.49M expected, 6.55M previous)
  • 5:30 pm GMT: Deutsche Bundesbank President and ECB Member Jens Weidmann will speak
  • Dairy auction currently underway (1.9% previous); auction usually ends at around 2:00 pm GMT