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The Greenback extended its gains and easily trumped most of its peers during the morning London session. In fact, the only currency that gave the Greenback a good fight was the safe-haven yen.

The higher-yielding Kiwi and Aussie, meanwhile, were the Greenback’s biggest victims, likely because of they were getting some extra selling pressure due to the commodities slide and risk aversion in Europe.

And as a side note, the U.K.’s manufacturing PMI reading was slightly better-than-expected, which gave the pound some lift. However, there was not enough lift to allow the pound to fly, likely because commentary from Markit was’t too upbeat. Some market analysts were also saying that Brexit-related jitters were capping the pound’s gains ahead of  this Friday’s Brexit cabinet meeting.

  • Swiss retail sales y/y: -0.1% vs. 2.6% expected, 2.9% previous
  • Spanish manufacturing PMI: 53.4 vs. 53.6 expected, 53.4 previous
  • Swiss manufacturing PMI: 61.6 vs. 61.1 expected, 62.4 previous
  • Italian manufacturing PMI: 53.3 vs. 52.6 expected, 52.7 previous
  • French final manufacturing PMI: 52.5 vs. unchanged at 53.1 expected
  • German final manufacturing PMI: unchanged at 55.9 as expected
  • Euro Zone final manufacturing PMI: 54.9 vs. unchanged at 55.0 expected
  • U.K. manufacturing PMI: 54.4 vs. 54.2 expected, 54.3 previous
  • Euro Zone jobless rate: 8.4% vs. 8.5% expected, 8.4% previous

Major Events/Reports:

U.K.’s manufacturing PMI

It’s a brand new month, which means a fresh batch of U.K. PMI reports from Markit.

And first on the lineup is the U.K.’s June manufacturing PMI report, which surprised to the upside by revealing that the U.K.’s headline manufacturing PMI reading ticked higher from 54.3 to 54.4. The consensus was for the reading to tick lower to 54.2.

However, commentary from Markit was … not very upbeat.

As for specifics, Markit noted that the average reading for Q2 as a whole “is the weakest outcome since the final quarter of 2016.”

Markit also noted that “the overall rate of expansion in manufacturing output slowed, as growth of new order inflows improved only mildly.”

And while new orders growth improved slightly, “it remained among the weakest registered over the past yearand-a-half.”

Markit also pointed out that “June saw a solid improvement in the rate of job creation.” However, Markit was quick to give it a downbeat spin by also pointing out that “the overall rate of jobs growth remained below those seen through much of 2017.”

On a happier note (for rate hike expectations), “Input cost inflation accelerated to a four-month high in June, with companies reporting a wide range of inputs as up in price.”

More importantly, “Part of the rise in costs was passed on as higher selling prices,” according to the report.

Commodities crumble

Commodities were broadly in the red during the morning London. And the broad-based slide in commodity prices can probably be blamed on the Greenback’s overall strength.

After all, a stronger U.S. dollar makes globally-traded commodities (that are prices in $) relatively more expensive, especially for buyers who are holding non-USD currencies.

And for reference, the U.S. dollar index was up by 0.37% to 94.57 for the day by the end of the session.

Other than Greenback strength, market analysts also say that base metals were taking hits because of China’s poor manufacturing data and the ongoing trade spat between the U.S. and China, which threatens to weaken to demand for base metals.

Other market analysts, meanwhile, were blaming the slide in oil prices on higher oil output from Russia and Saudi Arabia, as well as a Trumps’s tweets over the weekend.

Precious metals were in the red, despite the risk-off vibes.

  • Gold was down by 0.37% to $1,249.90 per troy ounce
  • Silver was down by 1.19% to $16.005 per troy ounce

Base metals were also feeling the pain.

  • Copper was down by 0.54% to $2.950 per pound
  • Nickel was down by 1.87% to $14,670.00 per dry metric ton

Oil benchmarks were also took hits and were sinking

  • U.S. WTI crude oil was down by 0.35% to $73.89 per barrel
  • Brent crude oil was down by 1.08% to $78.38 per barrel

Gloomy start in Europe

Europe is starting the new trading week (and new trading month) on a downbeat note since the major European equity indices opened broadly lower and then steadily sank to fresh intraday lows as the session progressed.

And according to market analysts, the gloomy vibes in Europe were due to political uncertainty in Germany and the ongoing trade spat between the U.S. and China.

  • The pan-European FTSEurofirst 300 was down by 0.75% to 1,475.66
  • Germany’s DAX was down by 0.37% to 12,261.75
  • The blue-chip Euro Stoxx 50 was down by 0.79% to 3,374.55

U.S. equity futures were also feeling the pain, hinting that the gloomy mood may carry over into the upcoming U.S. session.

  • S&P 500 futures were down by 0.19% to 2,717.00
  • Nasdaq futures were down by 0.04% to 7,070.50

Major Market Mover(s):

USD

The Greenback was the one currency to rule them all during the morning London session. Not only that, the Greenback also happens to be the best-performing currency of the day.

There were no direct catalysts for the Greenback’s sustained strength, but some market analysts are attributing the Greenback’s strength to relief buying and speculation because of the narrative that the ongoing trade spat will supposedly hurt U.S. trade partners more than the U.S. itself.

NZD/USD was down by 41 pips (-0.60%) to 0.6722, AUD/USD was down by 22 pips (-0.30%) to 0.7354, EUR/USD was down by 24 pips (-0.20%) to 1.1629

JPY

The safe-haven yen likely got a boost because of the risk-off vibes in Europe, which allowed the yen to give the Greenback a good fight.

The yen lost out in the end and had to content itself with second place, though. Still, second place ain’t too bad. And all the more so, given that the yen also happens to be the second top-performing currency of the day (so far).

EUR/JPY was down by 18 pips (-0.14%) to 128.81, GBP/JPY was down by 40 pips (-0.28%) to 145.51, CHF/JPY was down by 19 pips (-0.17%) to 111.45

AUD & NZD

A stronger Greenback, risk aversion, and falling commodity prices meant a really bad day for both the higher-yielding Aussie and Kiwi. And between the two, it was the Kiwi that had it worse.

AUD/JPY was down by 21 pips (-0.25%) to 81.46, AUD/CHF was down by 10 pips (-0.13%) to 0.7307, AUD/CAD was down by 23 pips (-0.24%) to 0.9694

NZD/JPY was down by 41 pips (-0.55%) to 74.45, NZD/CHF was down by 27 pips (-0.41%) to 0.6679, NZD/CAD was down by 48 pips (-0.54%) to 0.8862

Watch Out For:

  • Canada Day holiday today
  • 1:45 pm GMT: Markit’s final U.S. manufacturing PMI (slight upgrade from 54.6 to 54.7 expected)
  • 2:00 pm GMT: ISM’s U.S. manufacturing PMI (58.5 expected vs. 58.7 previous)
  • 2:00 pm GMT: U.S. construction spending (0.5% expected vs. 1.8% previous)