Markets Calm Ahead of US Data
Markets were relatively well-behaved yesterday as investors held fire ahead of key inflation data out of the states this week. The major US indices experienced a quiet day with the Nasdaq adding 0.29%, the S&P dropping just 0.02%, and the Dow falling off 0.21%. The dollar slipped slightly on the day with the Dxy losing 0.1% with most of the majors trading at familiar levels. US Treasury yields also dropped marginally, the 2-year losing 1 basis point to trade at 4.857% and the 10-year off 1.6 basis points to 4.489%. Commodities were a bit livelier, Oil rising on improved demand from major players, Brent up 0.69% to $83.36 per barrel, and WTI up 1.1% to $79.19 per barrel. Gold also saw some movement, retracing the rally from the prior couple of days to drop 1% back to the $2,336 level by the close of NY.
Yen Still in Focus for FX Traders Ahead of Data
Markets have been relatively quiet for the last few days with FX in particular trading in familiar ranges. The hype surrounding recent intervention by the Japanese authorities has died down significantly, but Yen traders will have noticed that UsdJpy has gradually ground its way back up to a key level ahead of some key data releases this week. It is currently sitting around the 156.30 level which was the high on the bounce on May 2 after presumed intervention took the pair from 157.55 to 153.14. Price action would suggest that there is some interest around here as it has traded around this level for the last couple of sessions. There is no doubt that the pending US data is likely to be the next catalyst for a move in the Yen, however, some traders feel we may see some volatility ahead if we see a firm break of this level.
Markets Poised for Volatility Today
Global financial markets are prepared to jump back into action today after a relatively tepid last few days of trading. The Asian session looks set to follow the recent pattern as another quiet day in the US does little to inspire investors, however, this week’s data fest kicks off later today and traders are expecting volatility to pick up considerably. The focus will be on the UK on the European Open with key employment data due out early in the day, the expectation is for the claimant count to rise by 14k and the unemployment rate to move up to 4.3% and anything off those expectations should see moves in sterling markets. The major focus for most of the market, however, will come later in the day with the first inflation number of the week due out in the US. Core PPI data is expected to come in with a 0.2% monthly increase with the headline number showing a 0.3% rise and traders are expecting moves whatever the outcome. Later in the day, we are due to hear from Fed Chair Jerome Powell and although this time he’s not expected to move markets much, if there is any change in rhetoric, then volatility will jump swiftly.
