Asian equites started the week on the right foot, printing in the green as traders prepare for European led volatility after France Macron and his party took a majority lead in this weekend’s parliamentary votes and ahead of the todays important landmark which sees the beginning of the EU-UK negotiations regarding Brexit. The Nikkei 225 gained 0.6%, the ASX 200 gained 0.3% while China saw the Shanghai composite gain 0.7%, while the Hang Seng gained 1%.
In FX, the USD is looking healthier as we see the USD index, a measure of the strength of the USD against a basket of currencies, edge higher. The EURSD has found strong resistance at 1.1200 and is looking heavy, while the USDJPY is looking bullish after bulls defended the 110.50 level and now the 111.00 support level. The GBPUSD is slightly bid, as markets are pricing in a better than expected start to the EU negotiations, with the buyers looking to pop above 1.2800.
In commodities, the strength on the USD has seen gold tumble back to the 1250 support level, where bears will look to retake the reigns and head south to 1200, provided data out of the US remains positive and geopolitical factors remain stable. Crude oil remains on the back foot as bear hug the $45 level with news that implies a supply cut likely to send the commodity north to the $50 mark, and vice versa should oversupply concerns hit the market.
Today’s major event is the release of the Monetary Policy Meeting Minutes by the Reserve Bank of Australia (RBA). The minutes will communicate the RBA`s views and concerns regarding the Australian economy as well as the reason for the recent decision to hold rates at 1.5%. Should the report show that there are several key reasons for not increasing rates, that imply a longer duration of unchanged rates, we would see the AUD soften as trader’s price in the new dovish information. However, a more hawkish report is expected to lift the AUD as trader’s position themselves for a potential tightening of monetary policy by the RBA.