The markets extended recovery for the second day as the dollar lost ground ahead of this week’s inflation print. The markets experienced a risk on sentiment, as commodities and foreign currencies recovered gains on a weaker dollar. The UK markets were closed for bank holiday, while the New York session has light data ahead of key events.
USDCAD plunged by -0.30% as a rally in oil markets lifted the Canadian dollar. The US dollar suffered losses against the Canadian dollar for the 4th day in a roll ahead of US inflation data. Investors are pricing in a Fed pause following last week’s Fed Chair Powell speech. On the other hand, a recovery of oil prices from a 17-months low gave a boost to Canadian dollar strength. The pair fell towards the 1.3250 low, which coincides with a 2023 low, while upside gains would be capped by the 1.3400 level.
NZDJPY surged by +1.08% after the release of BoJ Monetary Policy meeting minutes. Although the Japanese Services PMI for April rose to 55.4 vs the 54.9 anticipated, the data felt to give support to the JPY as investors preferred the policy minutes more. The risk-sensitive NZD rose as risk appetite dominated the markets on Monday. The pair broke above the 85.40 level, a 2023 high and the next key level is 88.00 if 86.00 is breached. Traders should closely watch the release of Japanese Household spending data along with New Zealand Electronic Card retail sales.
European stocks were trading in a thin range as the UK observed the bank holiday. CAC40 rose by +0.21% as bulls held between 7350 support and 7500 resistance. DAX was steady at +0.02% as 16000 continues to hold as a near-term resistance, while on the downside 15750 remains a near-term target.
US stock futures were steady after parabolic gains on Friday as investors shift focus to inflation data. US500 futures were slightly lower by -0.18% after bulls bounced off the 4050 support. Upside gains are capped by the 4150 level. US100 futures were flat trading at +0.00% and critical levels to watch out for are 13000 support and 13250 resistance. US30 futures rose by +0.20% towards the 34000 level as bulls hold above the 33000 support.
In commodities, oil markets soared on Monday, extending Friday gains. USWTI crude oil futures rose by 2.86% towards the 75.00 level. Bulls surged as 68.00 held as a near-term support. Brent crude oil advanced by +2.47% extending a 3-day rally from the 72.00 and 77.50 remains a near-term cap.