Currencies
EUR/USD – the ECB rate decision and the subsequent press conference by ECB President Draghi was basically a non-event as was expected. It was not able to move the markets too much, as the ECB is taking a wait and see approach, pretty much as the BOE. However, the ECB does see a negative effect of a Brexit, but the exact size remains to be seen. Overall the Draghi tried to strike a positive tone, although he admitted that a lot will depend on the data coming in the coming weeks to see repercussions of the Brexit vote. In addition it is important to see how the negotiations unfold, but that obviously will take some time.
Today we have manufacturing and services PMI out of the Eurozone, which is important data and is likely to cause volatility.
USD/JPY – dropped sharply after it was reported that BOJ Governor Kuroda said it does not plans to use helicopter money, something that has been speculated. We saw a small correction after it became clear that this was this stance back in mid-June, although it is likely the BOJ won’t turn 180 degrees. The drop result in us trading below the recently breached resistance at the 106.3 level.
GBP/USD – the data out of the UK was pretty weak and that led to the GBP losing strength, although it was able to correct a large part of the move down afterwards. We have more data out of the UK today with manufacturing and services PMI.
USD/CAD – not surprisingly moved up as oil prices went down, to come near to the resistance around the 1.312 level. We will also be looking at the inflation data out of Canada this afternoon.
Indices
DAX 30 – did not see a lot of volatility as the ECB did not change its policy at the time, which was expected. However, the door is still open for a change, as Draghi said that the ECB has proven that it is willing, ready and capable to adept if and when necessary. Thus we are waiting for more post Brexit vote data.
S&P 500 – moved away from its record high due to a combination of some weaker earnings reports yesterday and also due to the decline in oil.
Commodities
Gold – moved up yesterday as oil and equities started to move down. We can see that gold has trouble moving above the 1333 level this week, so that is the nearest resistance at this point.
Oil – dropped once more to reach close to the support amid remaining concerns on the global oversupply, heightened by the continuing growing stockpile of gasoline. This is further reinforced by an expected rise in production in Iraq and also the assumption that Russia will continue to increase production to new record levels. If we see a break below the support that brings us straight to the lowest level since May. Will we see another increase in the number of active rigs to help with that?