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The choppy price action from the earlier session continued into today’s morning London session, with many currency pairs milling about in tight ranges for the duration of the session.

The pound was on the move, though, since it was kicked broadly lower when wage growth in the U.K. failed to impress. The Kiwi was also on the back foot during the session, likely because of signs of returning risk aversion. Price action on Kiwi pairs was much more subdued compared to pound pairs, though.

The Loonie, meanwhile, was the king of pips (or queen, if you like) during the session. Like the Kiwi, however, price action on most Loonie pairs was kinda choppy.

  • German final HICP m/m: no revision from 0.2% as expected
  • German final HICP y/y: no revision from 1.8% as expected
  • Swiss producer and import prices m/m: 0.3% vs. 0.0% previous
  • Swiss producer and import prices y/y: 0.6% vs. -0.1% previous
  • U.K. claimant count change: -2.8K vs. 0.8K expected, -4.2K previous
  • U.K. jobless rate: 4.3% vs. steady at 4.4% expected
  • U.K. average earning index 3m y/y: 2.1% vs. 2.3% expected, 2.1% previous
  • Euro Zone industrial production m/m: 0.1% as expected vs. -0.6% previous
  • Euro Zone industrial production y/y: 3.2% vs. 3.3% expected, 2.6% previous

Major Events/Reports

U.K. jobs report

The U.K.’s latest jobs report was released earlier today. And while yesterday’s CPI report brought smiles and laughter for pound bulls, today’s jobs report brought more frowns, thanks to disappointing wage growth.

But before that, let’s take a look at the other labor indicators first.

Let’s start with the jobless rate. And according to the latest jobs report, the jobless rate for the three months to July fell further from 4.4% to 4.3%, which is a new record low since comparable records began in 1971.

And the downtick is a healthy one since the employment rate climbed higher from 75.1% to 75.3%, which is the highest on record since 1971.

Moreover, the number of people claiming unemployment benefits fell by 2.8K in August instead of rising by 0.8%, which is good.

So far, everything looks okay. However, the market apparently ignored those and focused on wage growth instead.

And sadly, nominal average weekly earnings (bonuses included) only rose by 1.4% year-on-year in July. This is the weakest reading in three months and puts an end to two straight months of improving readings. The weak reading also brings the three-month average to 2.1%, which is below the 2.3% consensus.

On a happier note, the weak reading was due to the 11.1% drop in bonuses. If bonuses are stripped to get at regular average weekly earnings, then wages grew by 2.0%, which is the same pace as in June.

On a more downbeat note, real earnings (inflation is taken into account) dropped by 1.2%, which is the hardest drop in three months.

And if bonuses are stripped, then real earnings fell by 0.5%, which is also the poorest reading in three months and marks the sixth consecutive month of declines.

Commodities bounce, base metals slip further

After yesterday’s commodities rout, most commodities went on a uphill trek, although some base metals apparently got left behind.

Precious metals had a good run.

  • Gold was down by 0.41% to $1,338.12 per troy ounce
  • Silver was down by 0.66% to $18.008 per troy ounce

Oil benchmarks ourperformed.

  • U.S. WTI crude oil was up by 0.97% to $48.70 per barrel
  • Brent crude oil was up by 0.85% to $54.73 per barrel

Base metals were mixed, but most were down. Copper and Nickel, in particular, were down really hard.

  • Copper was down by 1.58% to $2.988 per pound
  • Nickel was down by 3.31% to $11,525.00 per dry metric ton

The U.S. dollar index was down 0.14% to 91.76 for the day when the session ended. And that’s the likely reason for the somewhat broad-based commodities rally. After all, a weaker Greenback means that globally-traded commodities become relatively cheaper for buyers that are holding other currencies.

Other than that, some market analysts also pointed to a report from the International Energy Agency that said that “Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly” as the reason for oil’s outperformance. Although preemptive positioning ahead of official U.S. crude oil inventories data later is also a possibility.

As for the slide in base metals, that was blamed by market analysts on profit-taking, worries that Chinese demand may be weakening, as well as signs of inventory buildup for some metals, namely copper.

Risk-off vibes returned but fading

Most of the major European equity indices opened lower, which means that risk aversion made a comeback. However, many European equity indices spent the session trying to claw their way higher and some of the major ones were even able to post gains by the end of the session.

According to market analysts, the risk-off vibes early on was due to the poor performance of companies that supplied apple, thanks to earlier news that the new iPhone X would be shipping at a later date.

As for the signs of returning risk-on vibes, there’s no clear catalyst for that. However, mining and energy companies were outperforming, so perhaps the commodities rally helped to improve overall sentiment.

  • The pan-European FTSEurofirst 300 was still down by 0.12% to 1,497.54
  • Germany’s DAX was already up by 0.13% to 12,541.50 after reaching a low of 12,493.50 earlier
  • The blue-chip Euro Stoxx 50 was already up by 0.29% to 3,522.50 after reaching a low of 3,521.50 earlier

U.S. equity futures, meanwhile, were still in negative territory but off their lows.

  • S&P 500 futures were down by 0.16% to 2,490.50
  • Nasdaq futures were were down by 0.22% to 5,991.13

Major Market Mover(s):

GBP

The pound took hits across the board when the U.K.’s jobs report failed to impress. The jobs report was actually mixed since most of the other labor market indicators were good. However, forex traders were apparently more focused on the disappointing wage growth.

GBP/USD was down by 31 pips (-0.24%) to 1.3277, GBP/JPY was down by 34 pips (-0.23%) to 146.15, GBP/CAD was down by 73 pips (-0.44%) to 1.6121

NZD

The Kiwi was dragged lower when risk aversion made a comeback early on. However, signs of returning risk appetite began to show later but the Kiwi either held steady or dipped further. No apparent reason why, but profit-taking after yesterday’s spike is a possibility.

NZD/USD was down by 11 pips (-0.15%) to 0.7282, NZD/CAD was down by 31 pips (-0.35%) to 0.8842, NZD/CHF was down by 14 pips (-0.20%) to 0.6990

CAD

For what it’s worth, since price action was kinda choppy, the Loonie was the best-performing currency of today’s morning London session, even though there were no direct catalysts. Oil outperformed during a commodities rally, though, and that may have helped to stoke demand for the Loonie.

USD/CAD was down by 26 pips (-0.21%) to 1.2142, AUD/CAD was down by 7 pips (-0.07%) to 0.9760, EUR/CAD was down by 17 pips (-0.12%) to 1.4551

Watch Out For:

  • 12:30 pm GMT: Headline (0.3% expected, -0.1% previous) and core (0.2% expected, -0.1% previous) readings for U.S. PPI
  • 2:30 pm GMT: U.S. crude oil inventories (4.1M expected, 4.6M previous)
  • 3:00 pm GMT: ECB’s Praet is scheduled to speak
  • 6:00 pm GMT: U.S. Federal budget balance (-$119.0B expected, -$43.0B previous)