FX & market recap:
All it took was a 5.67% jump in China’s Shanghai Shenzhen CSI 300 index, to stuff renewed COVID-19 outbreak fears into the back seat. The China Securities Journal published a front-page editorial saying that a “healthy bull market” is important, which is credited for fueling the rally.
The rest of the major Asia indexes joined in the fun, with Japan’s Nikkei 225 rising 1.83%. European indexes followed Asia’s lead. Germany’s DAX Index climbed 1.71%, and the UK FTSE100 rose 1.86%. S&P 500 futures are up 1.4% (as of 7 am ET) Oil prices inched higher while gold (XAUUSD) is unchanged from Friday’s close.
FX traders were a tad less excited about the China stock market rally. The US dollar is only modestly lower across the board. Today, US ISM Non-manufacturing PMI is expected to be 50, compared to last months 45.4 reading.
Canadian dollar highlights:
USD/CAD continues to consolidate last week’s losses with a negative bias inside a 1.3520-1.3620 band. The Bank of Canada Business Outlook Survey is released today. It is expected to be rather bleak as the survey was conducted at the height of the pandemic lock-downs, which suggests it should not have much impact on USD/CAD trading.
EUR/USD is trading with a bid tone and flirting with resistance in the 1.1300 area. German May Factory Orders rebounded, rising 10.3% compared to April’s 26.2%. Eurozone Retail Sales increased 17.8% in May, a vast improvement from the 12.1$ drop in April. Prices got an added boost after the Governor of the Bank of France and ECB board member Francois Villeroy said France’s recovery may be better than expected. EUR/USD technicals suggest further range trading while prices are in the 1.1170-1.1350 range.
British pound highlights:
GBP/USD is ticking higher towards last weeks 1.2537 peak, on the back of the improved risk sentiment. UK Construction PMI rose to 55.2 in June, which offset news of weak UK car sales, which were the lowest in 50 years.
Asia Pacific highlights:
USD/JPY rallied but gains stalled at 107.77 and prices retreated to the overnight low of 107.50, in early NY trading. Support from increasing US Treasury yields, compared to last week’s low was offset by fears of spreading COVID-19 cases in the US. Meanwhile AUD/USD and NZD/USD traded higher, supported by positive risk sentiment. AUD/USD traders are looking ahead to tomorrow’s RBA policy meeting. No change in rates is expected.