No traders in the US session? No problem!
Global stocks and commodities made big moves over the Fourth of July holiday, as the spotlight turned to political headlines.
Crude oil prices rose to their highest level in about two months, while European stocks made good gains thanks to the results of the elections in the United Kingdom.
Here are the updates you need to know:
headlines:
- Australia’s goods trade surplus narrowed in May to A$5.77 billion (A$6.20 billion expected, previous reading revised down from A$6.55 billion to A$6.03 billion)
- Switzerland’s unemployment rate held steady at 2.4% as expected in June
- German factory orders in May: -1.6% m/m (+0.5% expected, previous reading revised down from -0.2% to -0.6%)
- Swiss CPI in June: 0.0% m/m (+0.1% expected, +0.3% prior)
- The UK general election resulted in a landslide victory for the Labour Party. With 410 of the 650 seats in Parliament, he ousted the Conservative Party leadership for the first time in 14 years.
- UK Construction PMI June: 52.2 (F 54.0, Previous 54.7)
- Minutes of the European Central Bank’s June Monetary Policy Meeting It highlighted doubts about the region’s economic recovery and policymakers’ uncertainty about reaching the 2% inflation target.
- Japanese household spending in June: -1.8% y/y (+0.2% expected, +0.5% previously)
Price movement in the broad market:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Treasury Yield, Bitcoin Chart by TradingView
Risk assets were everywhere, as market correlations appeared to have collapsed during the US market holiday.
Crude oil performed well, despite falling early in the day, as the energy commodity got a boost from renewed tensions in the Middle East after news that Israel killed a senior Hezbollah commander prompted retaliatory strikes.
Gold had a positive start but traded cautiously throughout, as investors were likely to play it safe while waiting for the release of US non-farm payrolls data.
On the other hand, Bitcoin has been in a sell-off mode all along, falling below the key support area at $60,000. As it turns out, the BTC/USD pair is still experiencing profit-taking as Mt. Gox pays out nearly $9 billion in tokens to thousands of users.
Forex Market Behavior: US Dollar vs Major Currencies:
Comparison between the US dollar and major currencies Chart by TradingView
With US markets closed for the Fourth of July holiday, most USD pairs moved in ranges with a slight risk bias during most of the trading sessions.
The USD/CHF pair rose sharply on the release of weaker-than-expected Swiss CPI data, as the flat reading prompted traders to anticipate a dovish Swiss National Bank policy. Meanwhile, the UK general election sent a few GBP pairs lower amid stronger chances of an imminent Bank of England rate cut, although the pound managed to hold firm.
Higher-yielding currencies like the Australian and New Zealand dollars benefited from early risk-on flows that held up into the early London session, before joining the rest of their peers in moving sideways towards the dollar.
Potential catalysts coming up on the economic calendar:
- German Industrial Production at 6:00 am GMT
- French Industrial Production at 6:45 am GMT
- Swiss National Bank foreign exchange reserves at 7:00 am GMT
- SECO Swiss Consumer Climate Index at 7:00 am GMT
- FOMC Member Williams Speaks at 9:40 AM GMT
- US Non-Farm Payrolls Report at 12:30 PM GMT
- Canadian Jobs Report at 12:30 PM GMT
- Canadian Ivey PMI at 2:00 PM GMT
- Speech by ECB President Lagarde at 5:15 pm GMT
US markets are set to reopen today, and traders are likely to be greeted with another set of fireworks with the release of June non-farm payrolls data, which is likely to have strong implications for Federal Reserve policy.
Don’t miss Canada’s June employment report either, as the numbers could also make or break expectations for monetary easing by the Bank of Canada next month and are likely to drive big moves across Canadian currency pairs before the end of the week.
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