Markets appear to be off to a slow start this week, but could this be just the calm before the storm?
Stocks were in a positive mood while some risk flows emerged while profitable companies also made gains.
Read on to see how the rest of the major currencies are performing.
Titles:
- French President Macron has called for early elections, with the far-right movement gaining momentum in Germany and France
- Bank lending in Japan increased by 3.0% year-on-year in May (vs. 3.1% previously expected)
- Japan's current account surplus expanded from JPY 2.01 trillion to JPY 2.52 trillion (vs. JPY 2.09 trillion expected) in April as exports (2.7% y/y) outpaced imports (-3.4% y/y)
- Final Q1 2024 GDP in Japan at -1.8% y/y – better than initial -2.0% y/y reading and expected 2.0% decline – due to upward revisions to capital expenditure and inventory data
- Japan's final GDP reading for Q1 2024 was unchanged at -0.5% q/q, but the price index fell from 3.6% to 3.4% y/y.
- Japan Economy Watchers' Sentiment Index in May: 45.7 (48.6 expected, 47.4 previously)
- Swiss SECO Consumer Climate Index in May: -38 (-37 expected, -38 previously)
- Sentix Eurozone Investor Confidence Index in May: +0.3 (-1.5 expected, -3.6 previous)
- A Goldman Sachs analyst expected Brent crude to reach $86 a barrel by the third quarter thanks to strong demand in the summer.
Broad market price movement:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Yields, Bitcoin Overlay Chart by TradingView
Risk assets managed to stay afloat throughout the day, recovering from the post-nonfarm payrolls decline last Friday. After a bit of consolidation during the Asian market hours, gold and crude oil gained further momentum in their gains, with the latter ending up more than 3% by the end of the US session.
As it turned out, Goldman Sachs's numerologists forecast stronger summer demand for the commodity, predicting that Brent crude would trade at $86 a barrel by the third quarter.
US stocks also witnessed excellent performance, with the S&P 500 and Nasdaq closing at record levels. However, Bitcoin barely benefited from risk appetite, falling below the key $70,000 barrier.
Interestingly, Treasury yields were also in positive territory along with the dollar as traders braced for major US events this week.
Forex market behavior: US dollar against major currencies
Overlay of the US dollar against major currencies Chart by TradingView
Dollar pairs struggled to find clear direction in the wake of last week's non-farm payrolls surprise, with the greenback making gains against the euro early while falling against the Australian and New Zealand dollars throughout the day.
Weekend headlines about the European Parliament elections revealed that the far-right movement scored major victories against established parties in Germany and France. This prompted French President Macron to call early elections, sparking some political uncertainty in the region.
At the same time, risk-on gains and commodity price gains allowed the Australian dollar and New Zealand dollar to close roughly 0.50% higher against the greenback, leaving the oil-linked Canadian dollar far behind.
Potential catalysts coming on the economic calendar:
- The number of claimants in the UK changes at 6:00am GMT
- US NFIB Small Cap Index at 10:00 AM GMT
- Building permits in Canada at 12:30 pm GMT
- US 10-year bond auction at 5:00 PM GMT
- The New Zealand visitor arrives at 10:45pm GMT
Sterling price action may rise today, as traders prepare for a report UK job numberswhich includes changes in the number of claimants and the average earnings index which can influence the Bank of England's policy outlook.
Keep an eye out for the US 10-year bond auction towards the end of the New York session as well, as this could impact Treasury yields and USD trends!
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