Trading Forex and CFDs is risky

Macro Events & News

Market Analysis

FX News

European Outlook: Asian stock markets traded mixed overnight. Hang Seng and CSI 300 underperformed with losses of 1.7% and 1.0% respectivelyas after falling below the support line of 25500. The Yen strengthened as North Korea test fired a missile, which weighed on Nikkei and Topix together with fresh pressure on tech giants, while the ASX rallied and is up more than 1.5% as the central bank left rates unchanged. U.K. as well as U.S. futures are also heading south after broad gains in Europe yesterday, which were led by Eurozone markets after a source story suggesting the ECB is not ready to lift the implicit easing bias on QE. Oil prices have halted their winning streak and are down on the day. Today’s data calendar is quiet, with only Spanish unemployment and EMU PPI, as well as the U.K. Construction PMI. ECB’s Praet and Nowotny speak and the Riksbank is expected to keep the repo rate unchanged in its latest policy assessment.

 FX Update: The Australian dollar dove following the RBA announcement, with Governor Lowe’s statement giving a mixed prognosis of the economy and, in particular, highlighting that an “appreciating exchange would complicate” the transition of the economy from the mining investment boom. AUDUSD fell over 0.6% in making a four-session low at 0.7604, and AUDJPY shed over 1% in making a low at 85.85, which is also a four-session nadir. The RBA left the cash policy rate unchanged at 1.5%, as had been widely anticipated. Elsewhere, USDJPY tipped back under 113.00, putting in some space from yesterday’s seven-week high at 113.47. EURJPY and other yen crosses have seen a similar price action, with AUDJPY having led the way. EURUSD declined for a fourth-straight session following ECB efforts to correct its tapering message. The pair logged a four-session low at 1.1336.

US reports: revealed a June ISM pop to a 3-year high of 57.8, with a jobs index rise to a sturdy 57.2 that leaves upside risk for our 185k June nonfarm payroll estimate on Friday. Yet, we also saw a weak round of May construction spending data after annual revisions that lifted historic levels but that left a weaker entry into Q2, hence the Q2 GDP forecast trimmed to 2.4% from 2.6% with likely flat Q2 growth for both residential and nonresidential construction. The revised data show an even more dramatic home improvement surge since Q1 of 2016 despite some flattening in these gains in Q2, alongside a significant slowing in nonresidential construction growth since last August after a strong prior climb. Available vehicle sales figures suggest a June repeat of the 16.6 mln May pace, versus 16.8 mln in April, and an 18.3 mln cycle-high pace in December. A flat June headline and ex-auto retail sales figures can be assumed, with hits to sales from an estimated 4% June drop in gasoline prices and restraint in sales of building materials from a winter-boost.

The UK June manufacturing PMI came in much weaker than expected, at 54.3 in the headline reading, down from 56.3 in May, which itself was revised lower from 56.7. The new export orders component ebbed to a five-month low of 52.6 from 53.2 in the prior month, which is disappointing given the health of international economies and the significantly more competitive level of sterling following the Brexit vote last year. The pound and UK yields dipped on the data. Sterling markets are now looking to the services PMI survey for June (Wednesday) to better gauge any potential slowing in the broader economy that the manufacturing report might have portended, with the data arriving with BoE MPC members becoming increasingly eager to hike the repo rate from its record low rate of 0.25%.

Main Macro Events Today

  • UK Construction PMI – The UK Construction PMI expected to come in at 55.0 after 56.0 in the previous month.
  • ECBspeak –  Executive Board member Praet, who has been stalling attempts to change the guidance more decisively, is due to speak today, while on the opposite end of the spectrum, head of the Austrian central bank, ECB’s Nowotny  is scheduled to discuss the future of the Euro in Vienna.
  • CAD Manuf. PMI – The markets reopened, but the U.S. is closed for the July 4th holiday. The June Markit manufacturing survey is due today.

Click here to access the HotForex Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! The next webinar will start in:

Andria Pichidi

Market Analyst

HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.