Markets seemed to be off to a slow start this week, but could this just be the calm before the storm?
Equities were in a positive mood while some risk-on flows came in play while the comdolls also raked in gains.
Read on to find out how the rest of the major currencies are faring.
Headlines:
- French President Macron called for a snap election, as far-right movement gained traction in Germany and France
- Japan’s bank lending rose by 3.0% y/y in May (vs. 3.1% forecast and previous)
- Japan’s current account surplus expanded from 2.01T JPY to 2.52T JPY (vs. 2.09T JPY expected) in April as exports (2.7% y/y) outpaced imports (-3.4% y/y)
- Japan’s final Q1 2024 GDP at -1.8% y/y – better than the initial -2.0% y/y reading and the expected 2.0% decline – on upward revisions to capital spending and inventory data
- Japanese final GDP reading for Q1 2024 unchanged at -0.5% q/q, but price index downgraded from 3.6% to 3.4% y/y
- Japan’s Economy Watchers sentiment index in May: 45.7 (48.6 expected, 47.4 previous)
- Swiss SECO consumer climate index in May: -38 (-37 expected, -38 previous)
- Eurozone Sentix investor confidence index in May: +0.3 (-1.5 expected, -3.6 previous)
- Goldman Sachs analyst predicted Brent crude oil could reach $86 per barrel by Q3 on stronger summer demand
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Risk assets managed to stay afloat throughout the day, recovering from the post-NFP slump last Friday. After a bit of consolidation during the Asian market hours, gold and crude oil gained more traction on their rallies, with the latter ending up more than 3% higher by the end of the U.S. session.
As it turned out, number crunchers in Goldman Sachs predicted stronger summer demand for the commodity, projecting that Brent crude oil could be trading at $86 per barrel by Q3.
U.S. equities also had a stellar run, with the S&P 500 index and Nasdaq closing at record highs. Bitcoin barely took advantage of risk appetite, though, as it cruised below the key $70,000 barrier.
Interestingly enough, Treasury yields were also in positive territory along with the dollar while traders brace for this week’s top-tier U.S. events.
FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Major Currencies Chart by TradingView
Dollar pairs struggled to find a clear direction in the aftermath of last week’s NFP surprise, as the U.S. currency chalked up gains to the euro early on while slumping against the Aussie and Kiwi throughout the day.
Weekend headlines on the European parliamentary elections revealed that the far-right movement scored big victories against incumbent parties in Germany and France. This prompted French President Macron to call for a snap election, sparking some political uncertainty in the region.
Meanwhile, risk rallies and commodity price gains allowed AUD and NZD to close out nearly 0.50% higher against the dollar, leaving the oil-related CAD behind.
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. claimant count change at 6:00 am GMT
- U.S. NFIB small business index at 10:00 am GMT
- Canada’s building permits at 12:30 pm GMT
- U.S. 10-year bond auction at 5:00 pm GMT
- New Zealand visitor arrivals at 10:45 pm GMT
Pound price action could heat up today, as traders position for the release of the U.K. jobs figures, which include the claimant count change and average earnings index that could impact BOE policy expectations.
Do keep an eye out for the U.S. 10-year bond auction towards the end of the New York session also, as this could impact Treasury yields and USD trends!
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