No big data releases? No problem!
Major financial assets and major FX currencies saw volatility as traders priced in easing geopolitical concerns in the Middle East and their optimism for this week’s data and earnings reports events.
Here’s what you need to know about yesterday’s market events:
Headlines:
- Rightmove: the average asking price of new property in the U.K. rose by 1.1% to £372,324 in April, just under the record high prices in May 2023
- As expected, the People’s Bank of China (PBOC) maintained its 1-year and 5-year loan prime rates (LPR) at 3.45% and 3.95% respectively in April
- New Zealand’s credit card spending rose by another 1.4% in March after a 2.1% uptick in February
- Eurostat consumer confidence indicator for the EU and Euro Area remained at -15 (vs. -14 expected) in March
- The Swiss National Bank (SNB) raised its minimum reserve ratio to 4% from 2.5%, reducing interest costs for the central bank
- ECB Governing Council member Villeroy de Galhau said on Monday that oil is not likely to delay rate hikes unless there is a surprise
- Canada’s Industrial Product Price Index for March: 0.8% m/m (0.6% m/m forecast; 1.1% m/m previous); Raw Materials Price Index for March: 4.7% m/m (2.4% m/m forecast; 2.1% m/m previous)
- Australia’s Judo Bank Manufacturing PMI hit an eight-month high of 49.1 in April (vs. 45.7 in March); Services PMI reached a three-month high of 49.9 (vs. 47.3 in March)
- Japan’s au Jibun flash Manufacturing PMI improved from 46.4 to 48.1 in April; Services PMI inched up from 54.1 to 54.6
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
A lack of top-tier data releases encouraged asset-specific price action among the major financial assets on Monday. For example, Bitcoin (BTC/USD) extended its upswing following the “Bitcoin halving” event over the weekend.
Iran also downplayed Israel’s reported strikes from the previous week and doesn’t look interested in escalating the conflict which helped ease geopolitical concerns. This translated to weaker performances for crude oil and the U.S. bond yields.
But the biggest loser was spot gold, which fell by more than 2% as geopolitical tensions eased and speculations of a “higher for longer” interest rate environment in the U.S. kept USD supported.
FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Major Currencies Chart by TradingView
Easing concerns over the Fed’s “higher for longer” interest rate path and the Middle East conflicts weighed on the safe haven dollar early in the Asian session.
The Greenback managed to recoup some of its losses in the next couple of hours but the sentiment carried over to U.S. session traders who also priced in their optimism for this week’s parade of earnings reports.
At the end of the day, the U.S. dollar managed to remain in the green against fellow safe havens like USD and CHF and European currencies like EUR and GBP but lost tons of pips against commodity-related currencies like AUD, NZD, and CAD.
Upcoming Potential Catalysts on the Economic Calendar:
- U.K.’s public borrowing at 6:00 am GMT
- France’s manufacturing and services PMIs at 7:15 am GMT
- Germany’s manufacturing and services PMIs at 7:30 am GMT
- Euro Area’s manufacturing and services PMIs at 8:00 am GMT
- U.K.’s manufacturing and services PMIs at 8:30 am GMT
- U.S. manufacturing and services PMIs at 1:45 pm GMT
- U.S. new home sales at 2:00 pm GMT
- U.S. Richmond manufacturing index at 2:00 pm GMT
- New Zealand’s trade balance data at 10:45 pm GMT
- Australia’s quarterly CPI at 1:30 am GMT (Apr 24)
We’re getting the first look at how the manufacturing and services industries fared in the Euro Area, U.K., and U.S. in April!
Uniform or results may lead to directional moves for EUR, GBP, or USD so make sure you’re around to trade the potential catalysts!
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