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The Greenback’s rally stalled and selling pressure was clearly present, so much so that the Greenback was the worst-performing currency during the morning London session.

One currency’s loss is another currency’s gain, though. In this case, there were actually several beneficiaries, since the Greenback’s retreat likely helped to stoke demand for commodities, which also boosted demand for all the comdolls.

  • French government budget balance: -€55.1 vs. -€54.3B previous
  • Spanish unemployment change: -90.0K vs. -101.0K expected, -83.7K previous
  • U.K. construction PMI: 53.1 vs. 52.6 expected, 52.5 previous
  • Euro Zone PPI m/m: 0.8% vs. 0.4% expected, 0.0% previous
  • Euro Zone retail sales m/m: 0.0% vs. 0.1% expected, -0.1% previous

Major Events/Reports:

U.K. construction PMI

We got the U.K.’s manufacturing PMI report yesterday. And today, we finally got our hands on Markit’s June U.K. Construction PMI report, which revealed that the headline reading improved from 52.5 to a six-month high of 53.1.

The market was only expected an uptick to 52.6.

The better-than-expected reading was driven mainly by stronger residential and commercial construction activity. In addition, new orders grew at the fastest pace since May 2017.

Moreover, “The pace of job creation accelerated to its strongest for one year, while the latest rise in input buying was the steepest since December 2015.”

More importantly for inflation and rate hike expectations, “The latest increase in input prices was the steepest for nine months.”

BOE’s Saunders speaks

BOE MPC Member Michael Saunders was interviewed by CNBC earlier.

And in that interview, Saunders said that:

“If the economy plays out as I expect, it may be that rates need to go up a little faster than that.”

Saunders was asked to clarify what the phrase “a little faster means,” namely if it means two rate hikes each year.

However, Saunders didn’t really give a specific answer when he said that:

“I don’t think you can define it as that’s precisely a rule.”

Saunders was also asked about the BOE Chief Economist Andy Haldane’s unexpected decision to vote for a rate hike, and if that means that “that the differences are narrowing between various members.”

However, Saunders squirmed out of that one when he merely said that:

“Now, as to whether we form a consensus one way or another I suspect that will depend on how the data comes through.”

Anyhow, still a hawkish message overall. Not really surprising, though. After all, Saunders has consistently been voting for a rate hike for some time now.

Commodities recover

Commodities staged a broad-based recovery during the morning London session after getting a good beating yesterday.

And since yesterday’s commodities rout was partially blamed on the Greenback’s strength, it therefore makes sense to attribute today’s recovery on the Greenback’s overall weakness.

In fact, market analysts were saying that dollar weakness allowed base metals to overcome lingering trade-related jitters and concerns about China’s growth prospects.

And for reference, the U.S. dollar index was down by 0.21% to 94.40 for the day by the end of the session. Also, I mentioned earlier that the Greenback was the worst-performing currency of the morning London session.

Other than that, some market analysts were also attributing the jump in oil prices to supply disruptions over in Canada and Libya.

Precious metals apparently didn’t mind the risk-on vibes too much.

  • Gold was up by 0.53% to $1,248.30 per troy ounce
  • Silver was up by 0.95% to $15.985 per troy ounce

Base metals were broadly in the green.

  • Copper was up by 0.25% to $2.951 per pound
  • Nickel was up by 0.75% to $14,685.00 per dry metric ton

Oil benchmarks also extended their gains.

  • U.S. WTI crude oil was up by 1.18% to $74.81 per barrel
  • Brent crude oil was up by 1.06% to $78.12 per barrel

Appetite for risk recovers in Europe

The major European equity indices were broadly higher during today’s morning London session, which is an impressive recovery after yesterday’s beat-down.

And according to market analysts, the major European equity indices bounced higher today because of yesterday’s news that Seehofer reached a compromise deal with German Chancellor Merkel.

  • The pan-European FTSEurofirst 300 was up by 0.95% to 1,489.00
  • Germany’s DAX was up by 1.31% to 12,397.66
  • The blue-chip Euro Stoxx 50 was up by 1.22% to 3,414.25

U.S. equity futures were also well-supported by the risk-friendly vibes in Europe.

  • S&P 500 futures were down by 0.37% to 2,737.25
  • Nasdaq futures were down by 0.53% to 7,154.50

Major Market Mover(s):


The Greenback was the worst-performing currency of the morning London session.

There weren’t really any apparent catalysts for the Greenback’s weakness, but some market analysts suggest that market players may be taking profits off the table ahead of this Thurday’s FOMC minutes, as well as this Friday’s NFP report.


USD/JPY was down by 22 pips (-0.20%) to 110.82, USD/CHF was down by 19 pips (-0.19%) to 0.9925, USD/CAD was down by 37 pips (-0.28%) to 1.3143


Commodities were in recovery mode and the Greenback took a step back, which allowed all the comdolls (NZD, AUD, CAD) to take steps forward.

And among the comdolls, it was the Kiwi that was in the lead, followed closely by the Aussie, likely because the two got an extra boost from the risk-on vibes. Although it’s also possible that market players were wary of loading up on the Loonie, given that the jump in oil prices was partially due to supply problems over in Canada.

NZD/USD was up by 32 pips (+0.48%) to 0.6746, NZD/CHF was up by 26 pips (+0.39%) to 0.6695, NZD/JPY was up by 21 pips (+0.29%) to 74.76

AUD/USD was up by 25 pips (+0.34%) to 0.7403, AUD/CHF was up by 22 pips (+0.31%) to 0.7347, AUD/JPY was up by 12 pips (+0.15%) to 82.03

EUR/CAD was down by 19 pips (-0.12%) to 1.5331, GBP/CAD was down by 15 pips (-0.18%) to 84.31, CAD/CHF was up by 11 pips (+0.16%) to 0.7551

Watch Out For:

  • 1:30 pm GMT: Markit’s Canadian manufacturing PMI (56.2 previous)
  • 2:00 pm GMT: U.S. factory orders (0.0% expected, -0.8% previous)
  • 4:00 pm GMT: ECB Member Peter Praet is expected to give a speech
  • Dairy auction currently underway (-1.2% previous); auction usually ends at around 2:00 pm GMT