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Markets experienced a relief rallied on Monday as the dollar strength continues to recede. The Dollar is under selling pressure on Monday following last week’s Fed comments downplaying a 100bps hike in July. The global stock markets were risk-on as investors price in the earnings season. President Biden’s visit to Saudi Arabia was futile leaving markets forecasting a supply squeeze in the near term causing a rally in commodities.
EURUSD climbed up from parity ahead of the European Central Bank meeting this week. The bank is expected to raise rates from the neutral zone by 25bps on Thursday. The euro is stronger amid Dollar weakness following a halt of a 100bps hike by the Fed and pricing in 75bps. The Spanish trading balance rose to -4.76B from -6.4B helping the euro up. The pair is up +0.76% above 1.01000 with a near-term barrier at 1.0200 and 1.0400 further up.
NZDJPY has trimmed gains after climbing to 85.600 following a jump in NZD inflation figures. The NZD CPI for the second quarter rose to 7.3% against expectations of 7.1%. The pair is down -0.05% as the Yen is fighting for some ground despite being on a Marine Day Holiday. A break above 85.600 could renew bullish interests towards 86.800. However, if bears kick in the pair could trade down to 84.00.
GBPCAD soared by +0.57% ahead of UK`s CPI data. The country’s inflation for June is expected to rise to 9.3% from the previous 9.1%. The commodity currency, CAD, has failed to dominate despite rising oil prices. Rising supply concerns are taking the commodity’s price higher. The pair is up from 1.5440 with near-term targets at 1.5600. A break above may set targets at 1.5800
European equities opened high to start the week ahead of the ECB meeting. The ECB is expected to be less aggressive on tightening with 0.25% in focus. The FTSE 100 traded +1.15% higher breaching 7230, an 8-day high. Bullish targets are at 7300 and 7370 levels. CAC40 gained +1.40% trading above the 6000 psychological level. Further up bulls may target 6190 and 6400 in the near term. DAX rose by +1.50% above 13000, a 12-day high. A major barrier to the upside is seen at 13450.
US stock futures are trading in the positive territory Monday morning as the greenback continues to shade some ground. DJIA index futures surged higher by +0.85% with an intraday support at 31 270. Upside gains may be capped by 32 000 and 32 500 psychological barriers. S&P500 futures are up +0.97% establishing a fresh high in 5 days. However, if 3950, a 25-day high fails to hold bulls may renew targets to 4000 and 4075. Nasdaq100 futures pocketed +1.10% gains above 12 000 with bullish targets at 12500.
Gold prices are showing bullish resilience after a five-week decline to $1700, a 10-month low. The positive sentiment is backed by a weaker dollar on Monday as investors’ bets of the Fed’s 100bps rate hike are fading away as the Fed pins down a 75bps hike this month. Critical areas to watch out for to the upside are $1725 which coincides with the 50-day simple moving average and $17500, a 7-day high. A bearish run below $1700 could however set targets at $1680, a 26-month low.
