Quiet Trading Day with US Markets Closed
Traders enjoyed a quiet trading day to kick off the week yesterday, as most investors used the bank holidays in both the UK and the US as an excuse to keep their powder dry. Most markets experienced relatively calm trading days in familiar ranges, despite an early update out of the US that they would now not look to impose additional tariffs on the EU until July 1. This news did give European bourses a lift, with the CAC up 1.21% and the DAX up 1.68%. However, we will have to wait until later today for the reaction in US indices. FX markets were open but kept to tight ranges, with the DXY easing 0.1% lower on the day to close at 98.99. Oil traded in muted ranges, Brent contracts down just 0.04% to $64.74 and WTI off 0.28% to $61.53, whilst Gold drifted off resistance levels to close down 0.30% at $3,342.79 an ounce.
Euro in Focus for FX Traders Today
Despite trading in a relatively quiet range yesterday, FX traders are expecting to see further moves in the Euro today after two positive updates over the last 24 hours. Donald Trump’s reprieve of another month on additional tariffs on the EU gave the single currency a shot in the arm early in trading yesterday, and comments from European Central Bank President Christine Lagarde in Berlin yesterday that the Euro could become the world’s reserve currency were also seen as supportive. The Euro is still trading nearly 200 pips below this year’s high, but a further push higher in the next few sessions could see it challenge those levels and break higher, with the key 1.2000 psychological level the next target. However, if we do see some dollar strength or the potential for those tariffs to be put in place by the US, then the EURUSD could pull back into recent ranges, with initial support now on the May low and hourly trendline at 1.1060.
Markets to Pick Up Pace Today
Traders are expecting markets to pick up pace today after a lacklustre few sessions yesterday influenced by bank holidays in the Northern Hemisphere. The Asian session will see a strong focus on Japanese markets, with Bank of Japan Governor Kazuo Ueda scheduled to speak early in the day, with the Yen in particular focus given recent trade talks with the US and consequent volatility. There is little scheduled in the European session today, but investors are expecting to see a sharp increase in volatility as both the UK and US return to the fray. The New York session looks to have the propensity for moves across markets, with the first US data of the week due out early in the day. Durable Goods numbers (exp -7.6% m/m) and Core Durable Goods (exp -0.1% m/m) are out first, followed by the CB Consumer Confidence data (exp 87.1). We are also due to hear from some key central bankers during the session, including the Swiss National Bank’s Chairman Martin Schlegel and the Buba President Joachim Nagel.
