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    European Session – Oil breaches $50 a barrel; sterling tests $1.46

    It was a relatively quiet trading session, mainly due to the lack of major market moving data today. The US dollar was lower against most of its major counterparts like the euro and the pound and was also soft against the Canadian and Australian dollars. Fed Chair Yellen’s speech on Monday failed to show a repetition of her previously communicated call for a rate hike in the ‘coming months’, so this led to a move away from the greenback.

    European session data releases today included a stronger than expected German industrial production at 0.8% month-on-month in April from a drop of 1.1% in March. A 0.7% increase was expected. Other data out of Europe showed that Eurozone GDP was revised higher in the first quarter. The region grew faster than the previous estimate of 0.5% to show a 0.6% rate of growth quarter-on-quarter.

    The Eurozone GDP data helped the euro to rise against the dollar to reach a session high of $1.1379. The single currency was mostly steady throughout the session to trade around $1.1360.

    Data out of the US today was not market moving. Revised non-farm productivity data showed a decrease at a 0.6% annual rate in the first quarter. While this was an improvement from the fourth quarter’s -1.0% rate, it was still a contraction and this hurt the dollar, which fell versus the yen after the data to 107.27 from 107.71 yen.

    Sterling was a notable mover today. There was an unexplained spike in the Asian session to $1.4659. Despite easing back down after that jump, the pound managed to rise back up in European trading to test $1.4600. The only UK data today was the Halifax May house price index which came in at 0.6% month-on-month versus 0.3% expected. While this data point is not usually a market mover, the pound did rise after the release.

    Oil prices broke the key $50 a barrel level today. Brent crude, the international benchmark hit $51.27. This was the first time it has breached $51 since early October. Meanwhile, US oil futures rose to $50.33 a barrel.

    Oil prices have been lifted by concerns about supply disruptions in Nigeria, which is Africa’s largest producer. The country’s oil pipelines have been attacked by terrorists, sending production levels to two-decade lows.

    The API crude oil inventory report due later today will be closely watched, as it could have an impact oil prices. Following from this, markets will focus on trade data out of China during the Asian session on Wednesday.

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