Market Roundup
•German May Imports (MoM) -6.6%,2.0% previous
•German May Trade Balance 24.9B,19.9B forecast,22.1B previous
• German May Exports (MoM) -3.6%,1.6% previous
•French Jun Reserve Assets Total 248,106.0M,245,900.0M previous
•French Jul Sentix Investor Confidence -7.3,-0.6 forecast,0.3 previous
Looking Ahead Economic Data(GMT)
•15:00 US Consumer Inflation Expectations 3.2% previous
•15:30 US 3-Month Bill Auction 5.240% previous
•15:30 US 6-Month Bill Auction 5.115% previous
Currency Forecast
EUR/USD: The euro rose on Monday, recovering overnight losses that stemmed from projections from France's election which pointed to a hung parliament, while the dollar remained soft. investors weighed up the consequences of a hung French parliament.That was among several surprises in projected results, including the likely first-place finish for the leftist New Popular Front (NFP) alliance, and third-place showing for Marine Le Pen's nationalist, eurosceptic National Rally (RN), which had been the frontrunner going into Sunday's vote. Polling agencies forecast the left would get between 184 and 198 seats - well short of the 289 seats needed for an absolute majority. President Emmanuel Macron's centrist alliance was expected to get 160 to 169 seats, and the RN and its allies 135 to 143 seats. Immediate resistance can be seen at 1.0839 (23.6% fib), an upside break can trigger rise towards 1.0850 (July12th high).On the downside, immediate support is seen at 1.0809(38.2% fib), a break below could take the pair towards 1.0783(50% fib).
GBP/USD: The pound strengthened against the dollar on Monday following the Keir Starmer-led Labour Party's decisive victory over the Rishi Sunak-led Conservative Party in the United Kingdom's parliamentary elections. Labour won one of the largest parliamentary majorities with the second lowest share of the vote of any winning party in modern British history, underscoring how the electoral system favours established parties over smaller ones.With 648 of the 650 seats in parliament's House of Commons declared on Friday, Labour won 412 seats with 9.7 million votes, while the Conservative Party's vote collapsed, giving it 121 seats with 6.8 million votes. Sterling rose 0.1% to $1.2844, its highest since June 12. Immediate resistance can be seen at 1.2845(Daily high), an upside break can trigger rise towards 1.2859(23.6%fib), On the downside, immediate support is seen at 1.2788(38.2%fib), a break below could take the pair towards 1.2732(50% fib).
USD/CHF: The dollar edged up against the Swiss franc on Monday as investors prepared for a busy week that will see the release of a key inflation report, Federal Reserve Chair Jerome Powell's testimony. Investors took Friday's jobs report as adding to the case for a September rate cut from the Federal Reserve, with futures now implying a 77% chance of a move. Fed Chair Jerome Powell will have a chance to offer his outlook when he appears before Congress on Tuesday and Wednesday, while several other Fed officials are speaking this week. Another main economic event this week promises to be the U.S. consumer price report on Thursday, where headline inflation is expected to slow to 3.1%, from 3.3%, with the core measure seen steady at 3.4%. Immediate resistance can be seen at 0.8970 (38.2% fib), an upside break can trigger rise towards 0.9007(50% fib).On the downside, immediate support is seen at 0.8944(Daily low), a break below could take the pair towards 0.8916(23.6% fib).
USD/JPY: The U.S. eased against yen on Monday as investors digested Friday's jobs report in the U.S. and added to the case for a September rate cut from the Federal Reserve.Data last week pointed to a slackening labour market that keeps the U.S. central bank on course to start cutting interest rates soon.Markets are currently pricing in a 72% chance of the Fed cutting interest rates in September as well as another cut in December.This week investors' focus will be on Fed Chair Jerome Powell's semi-annual Congressional testimony, comments from a series of Fed officials, and U.S. inflation data. The dollar index , which measures the U.S. currency against the euro, sterling, yen and three other major rivals, was flat at 104.95, stabilising after a near 1% slump last week. Strong resistance can be seen at 161.33(23.6%fib), an upside break can trigger rise towards 162.38(Higher BB%fib).On the downside, immediate support is seen at 160.38 (38.2% fib), a break below could take the pair towards 158.49(50%fib).
Equities Recap
European shares gained on Monday after erasing early losses as investors moved past the initial shock from election results in France, which is facing a hung parliament with a leftist alliance unexpectedly taking the top spot.
UK's benchmark FTSE 100 was last up by 0.02 percent, Germany's Dax was last up by 0.25 percent, France’s CAC was last down by 0.30 percent.
Commodities Recap
Gold slipped on Monday as investors booked profits after soft U.S. jobs data fuelled prices to a more than a one-month high on rising expectations that the Federal Reserve will begin cutting interest rates in September.
Spot gold fell 0.6% to $2,376.40 per ounce as of 1223 GMT, after rising to its highest level since May 22 on Friday. U.S. gold futures eased 0.5% to $2,384.80.
Oil prices edged lower on Monday after gaining for four weeks as supply disruption worries eased on hopes of a ceasefire deal in Gaza, but the potential impact of Hurricane Beryl on supplies kept the slide in check.
Brent crude futures were down 42 cents, or 0.5%, at $86.12 a barrel, as at 1230 GMT. U.S. West Texas Intermediate (WTI) crude was at $82.64 a barrel, down 52 cents, or 0.63%.
