A lack of surprises from the French parliamentary elections over the weekend helped start Q3 2024 trading on a strong note on Monday.
Which assets saw notable moves at the start of the week?
We’re discussing the major market movers in the deets below!
Headlines:
- Canada’s markets out on Canada Day holiday
- au Jibun Bank final Japan Manufacturing PMI for June: 50.0 (50.1 expected and previous)
- Melbourne Institute inflation gauge remains at 0.3% m/m as expected in June
- Caixin manufacturing PMI for June: 51.8 (51.5 expected, 51.7 previous)
- German preliminary CPI in June: (0.2% expected, 0.1% previous)
- Procure Switzerland manufacturing PMI for June: 43.9 (45.2 expected, 46.4 previous)
- HCOB Eurozone final manufacturing PMI revised higher from 45.6 to a two-month low of 45.8 in June
- S&P Global U.K. final manufacturing PMI revised lower from 51.4 to 50.9 in June
- S&P Global U.S. final manufacturing PMI revised lower from 51.7 to 51.6 in June; “Selling prices increased at the slowest pace in the year-to-date“
- ISM U.S. manufacturing PMI fell from 48.7 to 48.5 in June; Prices Index slipped from 57.0 to 52.1; Employment Index contracted from 51.1 to 49.3
- In a forum, ECB President Christine Lagarde said “It will take time for us to gather sufficient data to be certain that the risks of above-target inflation have passed.“
- New Zealand’s NZIER quarterly business confidence index dropped from -25 in Q1 to -44 in Q2 2024 as higher interest rates continued to limit demand
- U.K.’s BRC shop price index increased by 0.2% in June after a 0.6% uptick in May as retailer prices stabilized
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Traders kicked off the week feeling relieved after the first round of France’s elections. The far-right National Rally came out on top, as many had anticipated, easing some concerns about future policies in the region.
This optimism spilled over into “risk” assets like Bitcoin and crude oil. Bitcoin got an extra boost from excitement over a possible approval of an ETH ETF later this month. Meanwhile, U.S. crude oil prices climbed as buyers factored in the summer driving season and potential disruptions from Hurricane Beryl affecting oil and gas production in the Caribbean. BTC/USD hit multi-day highs above $63,700, and WTI crude oil reached $83.50.
In the U.S. session, all eyes were on Treasury yields. Manufacturing PMIs released during the session highlighted some weaknesses and easing price pressures. However, the increased likelihood of a Trump presidency following last week’s debate sparked discussions about expansionary fiscal policies and higher inflation.
U.S. 10-year Treasury yields peaked at a four-week high of 4.49% before settling back to 4.46%.
FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Major Currencies Chart by TradingView
A bit of risk-taking after the weekend’s French elections and the start of Q3 2024 nudged the U.S. dollar slightly lower during the Asian session.
However, the Greenback started to bounce back during the European session as traders held back, waiting for key events like Powell’s speech and the upcoming FOMC meeting minutes.
In the U.S. session, USD-buying picked up steam, probably because U.S. Treasury yields were climbing. As mentioned earlier, talks of a possible Trump presidency raised concerns about higher inflation and the Fed keeping interest rates elevated for longer.
Despite weaker-than-expected manufacturing PMIs, the dollar still gained against most of its counterparts, although it saw only slight increases against the British pound and the euro. Both of these currencies were getting a boost from the relatively decisive French parliamentary elections over the weekend.
Upcoming Potential Catalysts on the Economic Calendar:
- Spain’s unemployment change at 7:00 am GMT
- Italy’s unemployment rate at 8:00 am GMT
- Euro Area flash CPI reports at 9:00 am GMT
- Euro Area unemployment rate at 9:00 am GMT
- Canad’s manufacturing PMI at 1:30 pm GMT
- ECB President Lagarde to give a speech at 1:30 pm GMT
- Fed Chairman Powell to give a speech at 1:30 pm GMT
- U.S. JOLTS job openings at 2:00 pm GMT
- Australia’s retail sales at 1:30 am GMT (July 3)
Traders are in for another busy day as the Euro Area’s inflation report due today may add to or diminish ECB interest rate cut speculations. The U.S. JOLTS job openings report could also get attention ahead of Friday’s anticipated U.S. NFP release.
And don’t forget about the central bank head honchos! Fed Chairman Powell and ECB President Lagarde will participate in a panel discussion where we may hear about their most recent policy biases. Don’t even think of missing it!
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