Dollar domination was the name of the game on Monday while risk assets like gold and crude oil took major hits.
What’s driving the markets these days?
Here are the updates you need to know:
Headlines:
- French snap elections ended in hung parliament deadlock between three opposition parties
- Japanese average cash earnings rose from downgraded 1.6% y/y to 1.9% in June vs. estimated 2.1% gain
- Japan’s Economy Watchers sentiment index in June: 47.0 (46.1 expected, 45.2 previous)
- People’s Bank of China held off buying gold for another consecutive month
- Germany’s trade surplus widened from 22.1B EUR to 24.9B EUR as imports (-8.7% y/y) fell faster than exports (-1.6% y/y) in May
- Eurozone Sentix investor confidence index in July: -7.3 (-0.6 expected, +0.3 previous)
- BOE MPC member Haskel mentioned that rates should stay unchanged again in August until inflation has “subsided sustainably”
- U.S. consumer credit in June: $11.4 billion ($9.7B expected, $6.5B previous)
- U.K. BRC retail sales monitor in June: -0.5% y /y (+0.9% expected, +0.4% previous)
- Australia’s Westpac consumer sentiment index in July: -1.1% (+1.7% previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
It was a light Monday in terms of top-tier data points, but that didn’t stop asset classes from chalking up major moves across the charts. In particular, commodities saw steep losses triggered by individual catalysts.
Gold prices tumbled on news that the People’s Bank of China (PBOC) refrained from buying gold for another month in a row this June while WTI crude oil sank on easing concerns about Hurricane Beryl disrupting production in Texas.
Bitcoin also had a rough start but managed to pull higher on reports that crypto funds registered inflows for the first time in a month, raking in $441 million last week while investors took advantage of lower prices.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar was off to a generally positive start, as it took advantage of some risk-off flows stemming from the surprise deadlock in the French snap elections.
However, it struggled to find direction for the rest of the day, dipping to the likes of the Loonie, yen, and European currencies midday, before cruising gradually higher during the New York session.
USD/JPY tossed and turned throughout, as traders still seemed on edge about potential yen-tervention, but eventually recovered back to the 161.00 handle.
Upcoming Potential Catalysts on the Economic Calendar:
- U.S. NFIB Small Business Index at 10:00 am GMT
- FOMC member Barr’s testimony at 1:15 pm GMT
- Fed head Powell’s speech on Semi-Annual Monetary Policy Report in Senate at 2:00 pm GMT
- Treasury Secretary Yellen’s testimony at 2:00 pm GMT
- FOMC member Bowman’s speech at 5:30 pm GMT
- Japanese PPI at 11:50 pm GMT
- Chinese CPI and PPI at 1:30 am GMT (July 10)
- RBNZ monetary policy decision at 2:00 am GMT (July 10)
Dollar price action could heat up today, as traders brace for Fed head Powell’s testimony in front of the Senate Banking Committee. Lawmakers are expected to press him for a timeline on cutting interest rates, so make sure you keep your eyes and ears peeled for any clues on what the U.S. central bank has up its sleeve!
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