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GBP pairs gapped lower at the start of the week and most of them were unable to fill those gaps during the morning London session, thanks to an influx of sellers due to the U.K.’s disappointing manufacturing PMI report.

Improving risk sentiment, meanwhile, meant that some of the themes from the earlier Asian session were reversed. And most notable among these are the Aussie’s broad-based rise and the yen taking a step back.

Aside from those, the euro is also worth highlighting since it was the second top-performing currency of the session, likely because of relief-buying due to the CBRT’s announcement that it will likely hike rates to keep Turkey’s inflation in check.

  • Australian commodity prices y/y: 6.7% expected vs. 7.5% previous
  • Swiss retail sales y/y: -0.3% vs. 1.2% expected, 0.2% previous
  • Spanish manufacturing PMI: 53.0 vs. 52.5 expected, 52.9 previous
  • Swiss manufacturing PMI: 64.8 vs. 61.0 expected, 61.9 previous
  • Italian manufacturing PMI: 50.1 vs. 51.2 expected, 51.5 previous
  • French final manufacturing PMI: 53.5 vs. no change from 53.7 expected
  • German final manufacturing PMI: 55.9 vs. no change from 56.1 expected
  • Euro Zone final manufacturing PMI: unchanged at 54.6 as expected
  • U.K. manufucturing PMI: 52.8 vs. 53.9 expected, 53.8 previous

Major Events/Reports:

CBRT to hike rates?

The Central Bank of the Republic of Turkey (CBRT) essentially stated that it will likely be hiking this September in order to rein in Turkey’s rather high inflation when the CBRT announced the following earlier:

U.K.’s manufacturing PMI

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

As usual, the U.K.’s manufacturing PMI report was the first to be released. The report was a disappointment, however, since contrary to expectations that the headline reading will tick higher from 53.8 to 53.9, the actual reading for August came in at 52.8, which is the poorest reading in 25 months!

And the details didn’t really help much since Markit noted that manufacturing output “rose at the slowest pace in 17 months in August.” The slowdown in manufacturing output also led to jobs growth “slumping to near-stagnation” in August.

The future also doesn’t loo too good since “growth of new order inflows eased to its weakest during its current 25-month sequence of expansion” and business optimism “dipped to a 22-month low.” And according to survey respondents, domestic was softer, but “the main drag was the trend in new export orders.”

And as usual, some survey respondents “noted concerns about the ongoing uncertainty about Brexit and the exchange rate.”

On a slightly happier note, “inflationary pressure remained relatively strong in August, with both output charges and input costs rising at above survey average rates.”

Commodities broadly higher

Most commodities were broadly in the green during the morning London session. We can’t really point to Greenback strength, though, since the Greenback was mixed during the session and U.S. dollar index is still up by 0.04% to 95.09 for the day.

Market analysts couldn’t really pinpoint a reason for the rise in commodity prices. But with regard to oil, some market analysts say that oil prices were well-supported because of U.S. sanctions against Iran.

Base metals were actually mixed, but most were in the green.

  • Copper was up by 0.08% to $2.667 per pound
  • Zinc was up by 0.23% to $2,467.25 per dry metric ton

Precious metals were also in positive territory.

  • Gold was up by 0.22% to $1,207.10 per troy ounce
  • Silver was up by 0.55% to $14.560 per troy ounce

And the same can be said of oil benchmarks.

  • U.S. WTI crude oil is up by 0.26% to $69.95
  • Brent crude oil is up by 0.58% to $78.09

Risk-taking prevails in Europe

The major European equity indices started the week by opening lower and then plumbing fresh intraday lows.

And according to market analysts, the risk-off vibes were due to risk sentiment spillover from the earlier Asian session.

However, the major European equity indices later began clawing their way back up. And many of them were even able to close out the session in positive territory, which is a sign that risk-taking was the dominant sentiment.

The catalyst for the improvement in risk sentiment is not yet clear. However, it’s likely that the commodities rally helped since the energy sector was already in the green while mining shares are well off their lows.

Financials were also in demand, likely because of relief buying due to the CBRT’s announcement that it will likely hike this September to keep Turkey’s inflation in check. And remember, financials took the brunt of it when Turkey’s problems came to the fore back in August.

  • The pan-European FTSEurofirst 300 was already up by 0.08% to 1,495.31
  • Germany’s DAX was still down by 0.16% to 12,341.65 but off the day’s low at 12,309.05
  • The blue-chip Euro Stoxx 50 was already up by 0.13% to 3,395.05

Major Market Mover(s):


The pound’s losses piled up during the morning London session, thanks to the U.K.’s disappointing PMI report.

However, market analysts are still also blaming the pound’s weakness on E.U. Chief Brexit Negotiator Michel Barnier’s comments over the weekend that he’s “strongly opposed” to British PM Theresa May’s Brexit plan.

GBP/USD was down by 45 pips (-0.35%) to 1.2869, GBP/AUD was down by 105 pips (-0.58%) to 1.7858, GBP/NZD was down by 62 pips (-0.32%) to 1.9476


The safe-haven yen erased its earlier gains on most pairs and was the second worst-performing currency of the session after the pound, likely because of the risk-on vibes in Europe.

USD/JPY was up by 21 pips (+0.19%) to 111.12, CHF/JPY was up by 14 pips (+0.12%) to 114.50, CAD/JPY was up by 12 pips (+0.14%) to 85.05


The risk-friendly environment may have been toxic for the yen, but it was paradise for the Aussie. And it probably helped that commodities were on the rise.

AUD/USD was up by 17 pips (+0.24%) to 0.7206, AUD/JPY was up by 34 pips (+0.43%) to 80.73, AUD/CAD was up by 26 pips (+0.28%) to 0.9414


The euro probably enjoyed some relief buying since it was jolted higher after the CBRT announced that it will likely hike rates this September. And remember, the euro was one of the biggest victims of the Turkish lira crisis back in August.

EUR/USD was up by 12 pips (+0.10%) to 1.1611, EUR/JPY was up by 37 pips (+0.29%) to 129.02, EUR/GBP was up by 41 pips (+0.45%) to 0.9021

Watch Out For:

  • 5:15 pm GMT: Deutsche Bundesbank President and ECB Member Jens Weidmann will speak
  • 6:30 pm GMT: Chicago Fed President Charles Evans is expected to speak
  • The U.S. and Canada will be observing Labor day holiday today