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There was thin liquidity in the markets early Monday morning as investors prepare for the eventful week. German Ifo Business climate and UK industrial trend orders weighted market mood. The 2-year note auction is placed on Monday strategically ahead of Fed’s expected 75bps hike at its Wednesday policy meeting.
The AUDUSD rallied by +0.45% early Monday morning on receding dollar strength. The US Services PMI dropped from 52.6 surveyed to 47.0 in July. The US CB Consumer confidence due for release on Tuesday will be key ahead of the Wednesday Fed policy meeting. The pair bounced off a 4-day low at 0.6880 and bulls are targeting the 0.7000 level, a 6-weeks high. A break above that level could reinforce the bullish outlook towards the 0.7200 level. However, the Fed policy meeting will be the major indicator of direction for the pair.
GBPJPY soared by +0.56% ahead of the BoJ policy meeting minutes release. The Japanese Yen was down-beat in the broad market as the BoJ maintained an ultra-loose policy. Investors are embracing a risk-on sentiment underpinned by the UK CBI Industrial Trend Orders. The bulls rallied from near-term support at the 163.000 level and upside gains are capped by the 165.25 weekly high. A break above that level could open the way for further gains towards the 167.80 level.
EURNZD trimmed early gains to -0.05% as German business climate data missed expectations. German IFO Business Climate dropped to 88.6 from 90.2 forecasted, while German Business expectations (July) missed expectations to 80.3 from a previous reading of 85.5. Bulls lost stream below the 1.6370 previous support-turned-resistance and the next critical target is the 1.6180, a 13-week low.
European stocks maintained modest gains ahead of the Fed minutes meeting on Wednesday. The FTSE 100 rose by +0.64% despite trading activity capped inside the 7336 and 7236 range. A break above the near-term high at 7336 could see bulls targeting the 7650 level.
CAC40 soared by +1.19% and gains are capped by the 6250, last week’s high. A break above that immediate resistance could reinforce buying pressure towards the 6400 psychological barrier. A break below 6120 could invalidate the near-term bullish outlook.
DAX rose by +0.41% from the 13100 support and a break above 13400 could open the way for the 13800 level.
US stocks futures were up early Monday morning amidst a weaker dollar. The S&P500 futures were higher by +0.51% from 3950, Friday’s closing price. A break above the 4000 psychological resistance could reinforce the bullish outlook and the next possible target is at 4200, a 9-week high. Nasdaq 100 futures rallied by +0.50% and upside gains are capped by the 13000 psychological resistance.
Dow Jones Industrial Average index futures rose by +0.53% reclaiming the 32000 level and bulls could challenge the 32800 near-term barrier. Near-term support is at 31800 and a break below that level could cause selling pressure towards the 31000, a 6-day low.
USWTI crude oil futures surged by +0.64% after slightly sweeping below 94.37 and the next critical level is at the 100.00 psychological barrier. Brent rallied by +0.51% and critical levels to watch out for are the 107.50 resistance and 100.00 psychological support.
