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The Greenback easily crushed all opposition and was the top-performing currency of the morning London session (and of the day for that matter).

The risk-off vibes, meanwhile, very likely helped the safe-haven yen to claim second place after the Greenback, with the safe-haven Swissy in third place.

As for the main losers, that would be the Aussie and Kiwi, since the two higher-yielding currencies likely got extra selling pressure because of the commodities rout.

  • Swiss trade balance: CHF 2.59B vs. CHF 3.22B expected, CHF 2.81B previous
  • U.K. retail sales m/m: -0.5% vs. 0.2% expected, 1.4% previous
  • U.K. core retail sales m/m: -0.6% vs. 0.1% expected, 1.4% previous

Major Events/Reports:

U.K. retail sales report

The Office for National Statistics (ONS) released the U.K.’s June retail sales report earlier and it was rather sad (for the most part).

To be more specific, the report revealed that headline retail sales volume in the U.K. fell by 0.5% month-on-month, contrary to expectations for a 0.2% rise.

A closer look at the details show that many store types weaker increases in sales volume, which is why the core reading fell by 0.6% (+0.1% previous).

Year-on-year, headline retail sales slowed drastically from 4.1% to 2.9%, which is pretty bad since the market was expecting annual retail sales volume to grow by 3.5%.

On a happier note, retail sales volume for all of Q2 is 2.1% bigger compared to Q1, despite the decline in monthly retail sales volume in June. And that means that retail sales will have a stronger contribution to Q2 GDP growth.

Commodities clobbered

Almost all commodities were drowning in a sea of red during the morning London.

And we can probably blame the Greenback’s strength for that. After all, a stronger Greenback means that globally-traded commodities, which are prices in U.S. dollars, become relatively more expensive, especially for market players who are holding non-USD currencies.

And for reference, the U.S. dollar index was up by 0.38% to 95.19 for the day by the end of the session.

Other than Greenback strength, market analysts also blamed the slide in base metals on concerns related to China’s growth, given that China is the biggest importer of industrial metals.

The slump in oil prices, meanwhile, was also attributed by market analysts to yesterday’s increase in U.S. crude oil inventories and signs that U.S. oil output continues to grow, as well as rumors that OPEC and other non-OPEC producers are beginning to unwind their oil cut deal.

Base metals got thrown into the scrap heap.

  • Copper was down by 2.97% to $2.678 per pound
  • Nickel was down by 2.73% to $13,292.50 per dry metric ton

Oil benchmarks were also sinking.

  • U.S. WTI crude oil was down by 1.31% to $66.86 per barrel
  • Brent crude oil was down by 1.02% to $72.16 per barrel

Precious metals got hammered, despite the risk-off vibes.

  • Gold was up down 0.97% to $1,216.00 per troy ounce
  • Silver was down by 1.95% to $15.270 per troy ounce

Risk aversion returns

Risk aversion apparently made a comeback during today’s morning London session since the major European equity indices were broadly reeling in pain.

And according to market analysts, risk aversion returned to plague Europe because of disappointing earnings results.

And to that I’d add the commodities rout since mining, basic resources, and energy stocks were some of the biggest losers during the session.

  • The pan-European FTSEurofirst 300 was down by 0.18% to 1,513.57
  • Germany’s DAX was down by 0.42% to 12,713.18
  • The blue-chip Euro Stoxx 50 was down by 0.31% to 3,474.05

U.S. equity futures were also dragged into negative territory.

  • S&P 500 futures were down by 0.30% to 2,807.50
  • Nasdaq futures were down by 0.39% to 7,375.50

Major Market Mover(s):

USD

The Greenback was the one currency to rule them all during the morning London session and also happens to be the strongest currency of the day (so far).

There were no direct catalysts for the Greenback’s strength, but market analysts pointed to Fed Powell’s recent testimonies, which reinforced rate hike expectations and put interest rate differentials into play (in favor of the U.S. dollar).

USD/CHF was up by 16 pips (+0.16%) to 1.0019, USD/JPY was up by 14 pips (+0.13%) to 112.96, USD/CAD was up by 54 pips (+0.41%) to 1.3235

AUD & NZD

Greenback strength, falling commodity prices, and risk aversion meant bad news for the higher-yielding Aussie and Kiwi, so much so that the two found themselves at the very bottom of the forex heap.

And between the two, it was the Aussie that was weaker since AUD/NZD was down by 27 pips (-0.25%) to 1.0904, probably because concerns related to China’s growth and Chinese Foreign Ministry Spokesperson Hua Chunying’s comments during an earlier presser may have also been weighing the Aussie down.

AUD/USD was down by 55 pips (-0.75%) to 0.7343, AUD/JPY was down by 53 pips (-0.64%) to 82.95, AUD/CHF was down by 43 pips (-0.58%) to 0.7359

NZD/USD was down by 33 pips (-0.50%) to 0.6734, NZD/JPY was down by 29 pips (-0.38%) to 76.06, NZD/CHF was down by 23 pips (-0.34%) to 0.6748

JPY

The risk-off vibes may have been bad for the Aussie and the Kiwi, but they were apparently good for the safe-haven yen since the yen was the second top-performing currency of the morning London session.

EUR/JPY was down by 12 pips (-0.10%) to 131.02, GBP/JPY was down by 51 pips (-0.34%) to 146.70, CAD/JPY was down by 25 pips (-0.29%) to 85.34

Watch Out For:

  • 12:30 pm GMT: ADP’s Canadian non-farm employment change (2.9K previous)
  • 12:30 pm GMT: U.S. initial jobless claims (220K expected, 214K previous)
  • 12:30 pm GMT: Philadelphia Fed manufacturing index (21.5K expected vs. 19.9K previous)
  • 1:00 pm GMT: U.S. Fed Governor Randal Quarles will give a short speech
  • 2:00 pm GMT: CB’s U.S. leading index (0.4% expected vs. 0.2% previous)