With U.S. traders out on holiday and traders staying on the sidelines ahead of this week’s closely watched economic events, the major assets traded in subdued ranges.
Which headlines caught traders’ attention in the past trading sessions?
Headlines:
- BOJ’s meeting minutes showed “some members” pointing out that monetary policy intervention may be necessary if a weak yen influences the bank’s outlook
- Japan’s trade deficit widened from 0.58T JPY to 0.62T JPY in May as imports (1.5% m/m) outpaced exports (1.2% m/m)
- U.K. inflation dropped to the BOE’s target range for the first time since 2021 but GBP saw buying pressure as the markets focused on high services inflation and core CPI
- U.K. PPI input for May: -0.1% y/y (-1.0% forecast, -1.4% previous); PPI output at -1.7% (1.9% forecast, 1.1% previous)
- U.K.’s retail price index for May: 3.0% y/y (3.1% forecast, 3.3% previous)
- Euro Area current account surplus widened from 35.8B EUR to 38.6B EUR (vs. 35.2B EUR expected) in April
- U.K.’s house price index rose by 1.1% y/y (0.3% m/m) in April after a 0.9% uptick in March
- NAHB: Builder confidence for newly built single-family homes fell by 2 pts from 45 to 43 in June, the lowest since 2023, as “persistently high mortgage rates are keeping many prospective buyers on the sidelines”
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
As in the previous days, there was a lack of uniform price action among the major assets as traders waited for more closely watched market events scheduled later this week.
The Reserve Bank of Australia (RBA) inspired some volatility during the Asian session after it kept its interest rates steady as expected but also revealed that a rate hike was on the table this month.
In the UK, a lower-than-expected headline CPI report did little to rally support for the British pound, as attention turned to persistently high core and services inflation, suggesting that interest rates might remain elevated for an extended period.
Meanwhile, both crude oil and spot gold prices hovered around their weekly highs, lacking new buying interest. Traders are in a holding pattern, awaiting policy decisions from the Swiss National Bank (SNB) and the Bank of England (BOE), as well as global PMI reports due Thursday and Friday.
FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Major Currencies Chart by TradingView
With no significant U.S. reports to stir the markets and U.S. traders off for a bank holiday, the U.S. dollar stayed within narrow ranges against its major counterparts.
The USD dipped against “riskier” currencies like the AUD, GBP, and CAD during the Asian and early European trading sessions, but soon encountered choppy trading due to a lack of major market-moving headlines.
The dollar ended the day weakest against the Australian dollar and the British pound, influenced by positive reports from the Reserve Bank of Australia and the UK’s CPI report. However, it managed to maintain its gains against the New Zealand dollar and the yen.
Upcoming Potential Catalysts on the Economic Calendar:
- Switzerland’s trade balance at 6:00 am GMT
- Germany’s PPI report at 6:00 am GMT
- SNB’s policy decision at 7:30 am GMT, presser at 8:00 am GMT
- ECB’s economic bulletin at 8:00 am GMT
- BOE’s policy decision at 11:00 am GMT
- U.S. initial jobless claims at 12:30 pm GMT
- U.S. Philly Fed manufacturing index at 12:30 pm GMT
- U.S. housing starts at 12:30 pm GMT
- Euro Area consumer confidence at 2:00 pm GMT
- EIA crude oil inventories at 3:00 pm GMT
- FOMC member Barkin to give a speech at 7:30 pm GMT
- Australia’s flash PMIs at 11:00 pm GMT
- Japan’s national core CPI at 11:30 pm GMT
Traders are in for a BUSY trading day as both the Swiss National Bank (SNB) AND the Bank of England (BOE) drop their June monetary policy decisions.
Later on, a manufacturing PMI from the U.S. and FOMC member Barkin’s speech may cause increased volatility for the major U.S. dollar pairs. Stick around so you don’t miss any short or long-term trading opportunities!
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