A lack of data releases kept traders on the sidelines on Monday, leading to volatile price movements for most major assets.
What headlines dominated the news agencies anyway?
headlines:
- during the Weekend, British Chancellor of the Exchequer Rachel Reeves Beware ofMaking tough decisions about spending, social care, and taxes“After reviewing the budget”
- Rocket attack on the occupied territories by Israel Golan Heights Over the weekend, tensions in the Middle East increased.
- New UK mortgage approvals fell from 60.1k to 60.0k in June
- UK net retail lending rose from £2.8bn to £3.8bn (vs. £2.2bn expected) in June
- CBI: UK retail sales volumes fell from -24 to -43 in July; retailers cited unfavourable weather and market uncertainty as key contributing factors
- BRC: UK Shop Prices Index steady at 0.2% in July
- Japan’s unemployment rate fell to 2.5% from 2.6% in June
Price movement in the broad market:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Treasury Yield, Bitcoin Chart by TradingView
Crude oil was the biggest mover on a data-light day, rising sharply after a weekend rocket attack on the Israeli-occupied Golan Heights. However, WTI quickly fell and settled just below $76.00, likely on growth concerns in China and uncertainty ahead of Thursday’s OPEC+ meeting.
Other major assets saw wide volatility until the start of the US session when a slight recovery in US 10-year Treasury yields helped boost the US dollar and dragged down Bitcoin, gold and US stocks.
Given that price action stabilized after a few hours, it appears that month-end flows and profit-taking ahead of this week’s potential catalysts may have also played a role in the bearish swings of major assets around the London Fixed Rate.
Forex Market Behavior: US Dollar vs Major Currencies:
US Dollar Overlay Against Major Currencies Chart by TradingView
The US dollar started the day on a weak note, but stabilized at the opening of the Asian session and even gained some ground at the beginning of the European session.
There were no immediate catalysts for the move, although traders may have taken profits from their non-dollar positions ahead of this week’s key data releases.
Sterling came under downward pressure during the London session after Rachel Reeves, the new UK Chancellor of the Exchequer, indicated that the results of her audit of public spending could lead to spending cuts and tax increases. However, the pound recovered its losses and ended the day close to opening prices.
Meanwhile, the Japanese yen fell sharply and then rose in early Asian trading. There were no headlines to explain the move, but some yen traders may be positioning themselves ahead of the Bank of Japan’s decision this week.
Potential catalysts coming up on the economic calendar:
- KOF Economic Index at 7:00 am GMT
- Spanish CPI at 7:00 am GMT
- Spanish GDP at 7:00 am GMT
- Italy Preliminary GDP at 8:00 AM GMT
- Germany Preliminary GDP at 8:00 AM GMT
- Eurozone GDP at 9:00 am GMT
- S&P US Home Price Index at 1:00 PM GMT
- US Consumer Confidence Index at 2:00 PM GMT
- US JOLTS Job Openings at 2:00 PM GMT
- New Zealand Building Permits 10:45pm GMT
- Japan Initial Industrial Production at 11:50 PM GMT
- Japan Retail Sales at 11:50 PM GMT
- Australian CPI report at 1:30am GMT (July 31)
The pace of data releases is expected to pick up in the coming trading sessions as European countries drop their first estimates of GDP and inflation.
In the US, Fed consumer confidence data and JOLTS job openings data could weigh on markets ahead of the Fed’s policy decision and US non-farm payrolls data due later this week.
