Signs of stabilization in the Chinese economy, in the wake of a surprise upturn in the world’s second-largest economy’s manufacturing sector activity, overshadowed the negative US-China trade reports and mixed Australian data. Therefore, the market mood remained lifted on Monday, having boosted the higher-yielding assets at the expense of the safe-havens such as Yen, Gold etc.
The Yen dropped to six-month lows against the US dollar at 109.72, tracking the gains in the US equity futures, Asian equities and the US Treasury yields. EUR/USD held steady above the 1.10 handle while GBP/USD slipped towards the 1.29 handle on narrowing Conservatives’ lead over Labour Party and broad US dollar recovery.
Markets gear up for a busy start to a new week and month as well, with the final readings of the Euro area and the UK Manufacturing PMI to dominate the EUR calendar ahead of the European Central Bank (ECB) President Lagarde’s testimony before the European parliament at 14:00 GMT. Markets will closely hear her testimony on the monetary policy and economy for fresh EUR trades.
In the NA session, the US Manufacturing PMI data from both Markit and ISM will headline alongside the Canadian Markit Manufacturing PMI report. Apart from the data, the US-China trade-related developments and risk trends will continue to play a pivotal role in Monday’s trading.
Oil prices are correcting Friday's supply, with US WTI moving higher on positive weekend Chinese data, popping around 1.4% and rising from a low of $55.22 to a high of $55.98. On Friday, WTI was taken down heavily from the $58 handle to a low of $55.01 while investors withdrew the likelihood of a production-cut extension at this week’s OPEC + meeting.
Gold is flashing red, as stocks are gaining ground, possibly on the back of upbeat China data. At press time, the anti-risk yellow metal is trading at session lows near $1,460, representing a 0.28% decline on the day. The upbeat data is likely pushing the anti-risk gold lower.