Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
USD/CAD: commodity currencies rally against dollar
Information is not investment advice
Ichimoku Kinko Hyo
GBP/JPY: The pair is trading above the cloud. Further bullish pressure will lead the currency pair to retest the previous highs.
XAG/USD: Silver moves above 50 % retracement level. It seems that silver bulls have returned.
European Market View
European stock markets are seen opening lower Tuesday, as investors digest the collapse in talks over oil production levels between a group of major producers and the associated rise in prices. On a more positive note, U.K. Prime Minister Boris Johnson outlined plans on Monday to end all restrictions put in place to combat the Covid-19 virus in two weeks, even though the number of cases associated with the highly contagious delta variant is still increasing. Additionally, Germany announced plans to lift travel restrictions on fully vaccinated travelers from the U.K., and Portugal, from Wednesday, raising hopes of a summer vacation season. Orders for German-made goods posted their sharpest slump in May since the first lockdown in 2020, data showed on Tuesday, hurt by weaker demand from countries outside the euro zone and fewer contracts for machinery and intermediate goods. The data published by the Federal Statistics Office showed orders for industrial goods fell by 3.7% on the month in seasonally adjusted terms, marking the first drop in new business this year.
The dollar sold off in early European trade Tuesday, continuing its post nonfarm payrolls weakness, while both the Australian and New Zealand dollars strengthened amid signs that these economies are recovering strongly. The dollar has been dropping since Friday’s NFP, as although the release was upbeat, in that 850,000 jobs were added in June, it wasn’t sufficiently strong to push the Federal Reserve into tapering its asset buying anytime soon.
U.S. interest rate markets slightly softened their stance on early Fed tightening as a result of the jobs data, and that tone is likely to continue until Wednesday’s release of the minutes of the Fed’s June meeting. This was the meeting where officials brought forward their expectations of when interest rates will be raised to 2023.
EU Key Point
- European equities lower to kick start the day.
- Dollar slips as European trading gets underway.
- AUD/NZD gets RBA green light for continued push lower.
- RBA leaves cash rate unchanged at 0.10% in July monetary policy decision.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.