Markets maintained low trading volumes on Monday as countries observed labour day ahead of central banks’ week. The RBA is set to maintain its rate at 3.60% early Tuesday morning ahead of the FED, and ECB policy meetings. Risk appetite on the day was subdued after data from China showed that the Purchasing Manager’s Index dropped more than anticipated in April.
AUDUSD recovered +0.32% from Friday’s slump ahead of the RBA meeting. The central bank is expected to keep rates unchanged at 3.60% in May after inflation data last week slowed to 7%. The greenback’s recovery may, however, be capped by renewed bank jitters following the taking over of the First Republican Bank by JP Morgan. Australia’s biggest trade partner China realized a slowing economy in April as shown by downbeat PMI data on Sunday. The pair may rise to 0.6680 and 0.6700 if bulls manage to breach above 0.6650.
EURGBP traded +0.22% north as bulls reversed the previous week’s losses from 0.8765 lows. The Euro was quite strong amid a risk-averse sentiment ahead of the Eurozone’s CPI data. The inflation data may give an added lift to the currency if the figures come out more than anticipated, which may give the ECB more room to lift interest rates on Thursday. The sterling was weak today with no economic data to back it up as the UK observes Bank Holiday. Further up, the pair may seek 0.8800 and 0.8837.
NZDCAD gained +0.15% as bulls soared toward the 0.8400 psychological resistance. The Canadian dollar was under pressure weighed down by falling crude oil prices to start the week. Later today the Manufacturing Purchasing Manager’s Index from Canada will be due and is anticipated to show an expansion in the manufacturing sector. New Zealand’s jobs data will be featured on Wednesday along with a speech from RB NZ’s Governor Orr. The pair rose from a 0.8361 low as buyers extended a 3-day rally from 0.8330.
European stocks were quite mixed to start the week as the EU was closed in respect of the Labour Day Holiday. German 40 was up +0.44% as bulls aimed for 16 000. CAC40 was down -0.50% after bears got rejected at the 7400 mark. A breach lower may give up 7 300. UK100 was flat at +0.01% with room for a bearish run to 7730 if the 7860 area fails to hold.
US stock futures were largely flat ahead of the US PMI data. US 500 futures traded at -0.09% trading between 4161 and 4175. US 30 futures were caught in a tight range between 34 124 and 34 044. US 100 futures lost -0.14% capped by 13 280 as bears may slide to 13 150.
Additionally, crude oil prices fell on Monday riding on downbeat data from China which weighed on the demand outlook as the OPEC output cuts take effect this month. Brent crude traded -1.86% after giving up $ 80.00 as sellers target $78.00. US oil lost -1.93% with targets at $74.00.