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Lots of themes were playing out during the session, but the ones that stood out were pound and Kiwi strength, as well as the Swissy’s severe weakness.

  • Swiss GDP q/q: 0.3% vs. 0.5% expected, 0.1% previous
  • Swiss CPI m/m: 0.0% as expected, -0.3% previous
  • Spanish services PMI: 56.0 vs. 56.9 expected, 57.6 previous
  • Italian services PMI: 55.1 vs. 55.5 expected, 56.3 previous
  • French final services PMI: 54.9 vs. unchanged at 55.5 expected
  • German final services PMI: 53.5 vs. unchanged at 54.4 expected
  • Euro Zone final services PMI: 54.7 vs. unchanged at 54.9 expected
  • U.K. services PMI: 53.2 vs. 53.5 expected, 53.8 previous
  • Euro Zone retail sales m/m: -0.3% vs. -0.2% expected, 0.6% previous

Major Events/Reports

Mixed Swiss data

Switzerland released a couple of top-tier economic reports during the session.

First up was the Swiss Q2 GDP report. And unfortunately, Swiss Q2 GDP only grew by 0.3% quarter-on-quarter, missing expectations for a 0.5% rate of expansion. On a happier note, Q2’s growth rate was faster compared to Q1’s measly +0.1%.

But on a unhappy note, Q2 GDP only grew at a faster pace because the reading for Q1 was downgraded from +0.3% to +0.1%.

Year-on-year, Switzerland’s GDP grew by 0.3%. This is the slowest annual growth rate in 30 quarters. 30 quarters! This also marks the fourth consecutive month of slower annual growth.

Moving on, the other top-tier economic report was Switzerland’s August CPI report. Unlike the GDP report, the Swiss CPI report was pretty good, since CPI was flat month-on-month after two straight months of negative readings.

Year-on-year, this translates to a 0.5% rise, which is still anemic, but marks the second month of stronger annual readings at least.

U.K. services PMI missed slightly

The U.K.’s services PMI came in at 53.2 in July, slightly missing the consensus of 53.5 and lower than the previous month’s 53.8.

Despite the slight miss, this still makes it the lowest reading in 11 months.

And according to survey respondents, this was due to “subdued client demand and heightened uncertainty about the domestic economic outlook [that] had weighed on business activity growth in August.”

This caused new orders growth to increase “at the second slowest rate since September 2016” and “led to delayed spending decisions among clients.”

Additional commentary from Markit were upbeat, though. For one, “the latest survey data highlighted renewed pressures on operating capacity across the service economy.”

As a result, “Service providers responded to rising workloads and pressures on operating capacity by recruiting additional staff in August. The rate of job creation accelerated for the third month running to its strongest since the start of 2016.”

Moreover, “August data pointed to a sharp increase in average cost burdens at service sector companies. The rate of input price inflation picked up further from May’s recent low and was the fastest for six months.”

And most important of all (for inflation), “Higher operating expenses placed pressure on firms to increase their average prices charged in August. The latest rise in service sector charges was the fastest since April.”

RBA’s Lowe speaks

RBA Guv’nah Philip Lowe spoke at the RBA Board Dinner in Brisbane earlier and a few hours after the RBA announced its monetary policy decision.

And, well, he basically reiterated everything that was said during the earlier RBA monetary policy statement, such as a brighter investment outlook and an expected pickup in Australia’s GDP.

He also mentioned the slow growth in wage and its negative effect on inflation. However, he also restated that: “It is likely that, as our economy strengthens and the demand for labour picks up, growth in wages will pick up too.”

Lowe also noted that a weak Aussie dollar is good because “The lower exchange rate is helping, particularly in the tourism, education and rural industries.” And he was quick to take a jab at the stronger Aussie by saying that “An appreciating exchange rate would not be helpful from this perspective.”

Commodities rally

Commodities were broadly in rally mode during today’s morning London session.

Precious metals were up, despite returning risk-on vibes.

  • Gold was up by 0.28% to $1,315.17 per troy ounce
  • Silver was up by 0.24% to $17.385 per troy ounce

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

  • Copper was up by 1.44% to $3.163 per pound
  • Zinc was up by 0.12% to $3,201.50 per dry metric ton

Oil benchmarks were also well supported.

  • U.S. WTI crude oil was up by 1.31% to $47.91 per barrel
  • Brent crude oil was up by 0.53% to 52.62 per barrel

The U.S. dollar index was down by 0.08% to 92.50 when the session ended. And that may have helped to enticed demand for commodities.

However, some market analysts also pointed to Chinese demand and speculative buying as boosting base metals.

Other market analysts, meanwhile, say that the oil rally was due to news that U.S. oil refineries are restarting operations after disruptions caused by Hurricane Harvey.

Risk sentiment recovers

In what looks like a repeat of last week’s risk sentiment evolution, European traders apparently just shrugged off geopolitical risk related to North Korea since the major European equity indices were all in positive territory.

According to market analysts, basic resources, particularly the mining sector, led the uphill charge. As such, it’s probably safe to say that the returning risk-on vibes was due to the commodities rally.

  • The pan-European FTSEurofirst 300 was up by 0.16% to 1,471.79
  • Germany’s DAX was up by 0.57% to 12,171.25
  • The blue-chip Euro Stoxx 50 was up by 0.10% to 3,434.50

Major Market Mover(s):


Risk appetite made a comeback during today’s morning London session. And the safe-haven Swissy apparently became the biggest victim of it, since not only was the Swissy the worst-performing currency of the session, the Swissy is now poised to be the worst-performing currency of the day (so far) after being a net winner during the earlier Asian session. Maybe the SNB was sneakily weakening the Swissy as well?

USD/CHF was up by 35 pips (+0.37%) to 0.9599, EUR/CHF was up by 30 pips (+0.27%) to 1.1413, AUD/CHF was up by 26 pips (+0.35%) to 0.7653


If the safe-haven Swissy was the main victim of the returning risk-on vibes, then he higher-yielding Kiwi was likely the main beneficiary since it was the second strongest currency of the session after getting edged out by the pound. Although the commodities rally likely helped as well.

NZD/USD was up by 14 pips (+0.19%) to 0.7187, NZD/CHF was up by 38 pips (+0.55%) to 0.6899, NZD/CAD was up by 18 pips (+0.21%) to 0.8906


The pound was the best-performing currency of the session, even though the reading for services PMI missed slightly. And the reason for the pound’s strength was apparently the PMI report itself, or to be more accurate, the commentary on stronger jobs growth and inflationary pressure.

Other than that, there wasn’t really any other catalysts for the pound’s strength during the session.

GBP/USD was up by 29 pips (+0.23%) to 1.2957, GBP/JPY was up by 40 pips (+0.28%) to 141.70, GBP/CHF was up by 75 pips (+0.61%) to 1.2438

Watch Out For:

  • 2:00 pm GMT: U.S. factory orders (-3.3% expected, +3.0% previous)
  • 5:10 pm GMT: Minneapolis Fed President Neel Kashkari will speak
  • 10:05 pm GMT: Dallas Fed President Robert Kaplan has a speech
  • Dairy auction currently underway (-0.4% previous); auction usually ends at around 2:00 pm GMT