The expected weekend news of the US-China trade truce triggered some opening gap across the financial markets this Monday, with the safe-havens Gold and the Yen sold-off into the improvement in the trade sentiment. However, the scepticism over how far the trade ceasefire will last combined with weak Asian manufacturing sector activity reports kept the trade optimism in check.
USD/JPY jumped to 108.50 levels but quickly lost ground to 108.10 lows before bouncing back towards 108.40 levels. Meanwhile, the Euro and the Pound lost ground amid broad-based US dollar strength, led by the rally in Treasury yields.
Following a busy weekend, markets gear up for a busy start to a brand-new week, with the EUR macro calendar filled with a slew of manufacturing PMI reports from across the Euro area and the UK that started dropping in from 07:15 GMT. The German and Eurozone employment numbers alongside the credit growth data will also gain markets’ attention. The main influencing factor for the Euro is expected to be the decision on the EU’s to jobs while the USD dynamics will also play a pivotal role.
In the NA session, the US manufacturing PMI releases, both from ISM and Markit, around 14:00 GMT will hog the limelight while development around the US-China trade front will also keep the markets entertained. Apart from the data, the speeches by the ECB policymakers, UK political headlines and development around the OPEC meeting will be closely eyed.
Both crude benchmarks consolidated the early gains to multi-week tops ahead of the OPEC+ meeting, starting later today. Oil prices scored more than $1 a barrel on Monday, with OPEC and its allies on track to extend supply cuts until at least the end of 2019 at their meeting in Vienna this week.
Gold prices failed to fill the bearish opening gap and plummeted to over 1-week lows, closer to $1,380 level as the US-China trade truce weighed heavily on the commodity’s safe-haven status. This coupled with the fact that investors might have already started scaling back their expectations for a 50bps Fed rate cut move in July, the non-yielding yellow metal maintained the selling bias.