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Midday Brief
Market sentiment in the broader financial markets is currently mixed going into the United States trading session as European stock markets trade in range conditions, while US stocks look to set to open in the green after the long holiday weekend.
The main market theme during the European trading session has been the US dollar currency, with the greenback gaining broadly against all major currencies as it claws back Monday’s losses.
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The British pound started the European session in a buoyant mood, however, sterling quickly slipped as buyers failed to breach the 1.3900 resistance level. Dip-buying has so far been seen around the 1.3840 to 1.3830 support cluster.
If bulls continue to defend that area, and the US dollar index fails to the former weekly high then we could see a strong rebound in sterling. Key support under the 1.3830 level is found at 1.3800 and 1.3770.
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The EURUSD pair also got off to a great start during the early part of the European session and was aggressively sold from the 1.1900 area. The EURUSD pair has strong support between 1.1830 and 1.1810.
If dip-buyers can continue to defend the current monthly low then a strong rebound and an eventual breakout through the 1.1900 resistance barrier could be on the cards, with the 1.2000 to 1.2030 area a possible target.
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The Canadian dollar looked to be rallying against the yen and US dollar as oil prices tagged new yearly highs, although the sudden reversal of fortunes for the greenback started to put the Loonie under pressure.
Gold is gaining ground on Tuesday and is unusually looking past strength in the US dollar this morning. Gold has finally breached the $1,800 resistance level and is trading at a two-week high. The $1,830 and $1,845 level looked to be the near-term upside targets. The $1,800 level is now former resistance turned support.
Bitcoin and the broader crypto market are starting to slide going into the US trading session as investors weigh up comments from Chinese authorities this morning. The PBOC has warned institutions within its jurisdiction now to offer crypto related services.
Traders should be aware that the United States economy will release PMI manufacturing and ISM Services data later today. The data is expected to come in strong so this could explain while the US dollar is already starting to firm going into these releases.
It is also noteworthy that the US is holding a shorter dated bond auction later today featuring 3 month and 6 month treasury bills, however, the real focus is going to be on US economic data and indeed if the US dollar index can start to build on last months gains or resume the multi-year down trend.
