Asset classes appeared to still be marching to the beat of their own drum on Tuesday, as stocks rebounded while commodities were in the red.
What moves the markets these days?
Titles:
- BOJ core CPI in May y/y: 2.1% (1.9% expected, 1.8% previous)
- FOMC official Bowman: We have not yet reached the point where it is appropriate to cut interest rates as the data must show that inflation is moving sustainably to 2% first.
- Headline Canadian CPI in May YoY: 2.9% (2.6% expected, 2.7% previous), May core CPI monthly: 0.6% (0.2% previous)
- US S&P CS Composite Home Price Index in May YoY: 7.2% (7.0% expected, 7.5% previously)
- US Richmond Manufacturing Index in June: -10 (-3 expected, 0 prior)
- US CB Consumer Confidence Index in June: 100.4 (100.0 expected, previous reading reduced from 102.0 to 101.3)
- Cook, the FOMC official, says current policy is “in good shape” but at some point it is appropriate to lower it
- Nvidia shares rebounded nearly 7% after the previous day’s decline
Price movement in the broad market:
Dollar Index, Gold, S&P 500, Oil, US 10-Year Yields, Bitcoin Overlay Chart by TradingView
Market correlations were still all over the place on Tuesday, with commodities such as crude oil and gold falling while Bitcoin and US stock indices gradually rose. Treasury yields and the US dollar also ended in the green, even after tossing and turning throughout the day.
A surprise increase in private oil inventories by 900,000 versus the expected reduction of 3 million barrels as reported by the American Petroleum Institute resulted in WTI closing more than 1% in negative territory.
Meanwhile, the S&P 500 and Nasdaq halted a three-day decline when Nvidia shares closed up about 7%, after a big decline the day before. Other large technology companies such as Meta and Alphabet also reduced their previous losses.
Forex market behavior: US dollar against major currencies
Overlay of the US dollar against major currencies Chart by TradingView
The Asian and European trading sessions were mostly quiet in terms of first-order data printing and directional moves between the dollar pairs.
Bullish sentiment emerged in the US currency towards the end of market hours in London, thanks to hawkish comments from FOMC official Bowman who said they have not yet reached the point where it is time to cut interest rates.
However, the dollar regained some of these gains after seeing some weaker than expected average reports and some risk-on moves in the stock market. Canadian inflation numbers, which were stronger than expected, also lifted the Canadian dollar, closing marginally in the green zone.
Potential catalysts coming on the economic calendar:
- German GfK Consumer Climate Index at 6:00 AM GMT
- Swiss bank UBS Economic Outlook Index at 8:00 AM GMT
- US New Home Sales at 2:00 PM GMT
- EIA crude oil inventories at 2:30pm GMT
- Japan Retail Sales at 11:50 PM GMT
There are not many major catalysts for the market today, which may leave investors taking cues from the individual movers of each asset class once again. However, be sure to keep an eye on the headlines that influence overall risk sentiment as they may dictate today’s market trends!
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