Market correlations seem to be off so far this week, as commodities edged higher while stocks and bitcoin tumbled.
What’s up with that? And how did the rest of the asset classes perform?
Headlines:
- New Zealand May trade balance swung from 3 million NZD deficit to 204 million NZD surplus vs. estimated 155 million NZD surplus, as exports rose 2.9% while imports rose 0.6%
- BOJ Summary of Opinions revealed that policymakers discussed another rate hike in June meeting
- New Zealand credit card spending was flat in May vs. previous 0.8% y/y decline
- German Ifo business climate index in June: 88.6 (89.4 estimate, 89.3 previous)
- U.K. CBI industrial orders expectations index in June: -18 (-26 estimated, -33 previous)
- BOC Governor Macklem pointed to weaknesses in labor market data, emphasized that they are looking for more moderation in wages
- Australia’s Westpac consumer sentiment index in June: +1.7% (-0.3% previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Monday was relatively light in terms of top-tier data releases, leaving market players with not much to chew on for the most part of the day. Even risk sentiment seemed shaky, so asset classes worked with their own individual catalysts.
After an early dip, crude oil cruised higher for majority of the Asian session, before pulling back and staging an even sharper rally to close 1.30% higher. Expectations for stronger fuel demand in the summer are likely lifting energy prices, along with potential supply risks stemming from tensions in the Israel-Lebanon border.
Gold was also on a steady climb, but the S&P 500 index was unable to hold on to its intraday gains when Nvidia shares took a nasty tumble. Bitcoin was also notably in the red, as it slumped below the $60,000 mark.
FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Major Currencies Chart by TradingView
The Greenback didn’t exactly have the best of starts this week, as it barely held on to its tiny gains during the Asian trading session and wound up in the red against its forex peers.
The euro chalked up the largest lead, as Macron’s political party continued to lag behind the far right movement in the polls, lifting French equities to an 11-day high. Stronger than expected mid-tier data, namely the CBI industrial orders expectations report, from the U.K. also boosted sterling.
Interestingly enough, the Loonie was able to pocket some gains, despite BOC head Macklem talking about weak spots in the labor market and their easing plans, as the oil-related currency likely took advantage of the commodity’s climb.
Meanwhile, the yen managed to trim its losses, as traders remain wary of currency intervention, even after the BOJ meeting minutes revealed that policymakers actually considered hiking rates again this month.
Upcoming Potential Catalysts on the Economic Calendar:
- Canada’s CPI figures at 12:30 pm GMT
- U.S. S&P/CS Composite HPI at 1:00 pm GMT
- U.S. CB consumer confidence index at 2:00 pm GMT
- U.S. Richmond manufacturing index at 2:00 pm GMT
- FOMC member Cook’s speech at 4:00 pm GMT
- FOMC member Bowman’s speech at 6:10 pm GMT
Canada’s May inflation figures are the top-tier catalysts to watch out for today, as these would likely impact BOC policy expectations, particularly the odds of a July rate cut. Don’t forget to keep an eye out for the U.S. CB consumer confidence index since this is a leading indicator of spending and could influence overall market sentiment, too!
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