There is an overall lack of data this week with the exception of the much anticipated FOMC minutes which seem to be generating a lot more interest due to bored and lack of any other news or headlines this week. So traders now are trying to anticipate exactly what the minutes will show even though Fed speakers have been steadily on the public calendar ever since the Fed’s last meeting. Fed Chair Janet Yellen has made her views clear in recent press conferences and public addresses but boredom seems to have taken over market focus since traders returned from the US 4th of July holiday.
The pullback came as investors took a breather one session after major indexes hit record highs, boosted by a stronger-than-expected report on the US labour market. The Dow advanced 1.3 per cent last week, getting a final push above 17,000 on Thursday after the Labor Department’s monthly jobs report showed the US added 288,000 jobs in June, beating expectations of a gain of 215,000. Markets were closed Friday for the Fourth of July holiday. The US Dollar Index (DX) traded on a flat note in yesterday’s trading session on the back of weak market sentiments in later part of the trade led to rise in demand for the low yielding currency. Also, favorable employment data from the country in the last week continued with positive movement in the currency. However, estimates of rise in interest rates by the US Federal Reserve before the expectations capped sharp gains in the greenback. The currency touched an intraday low of 80.24 and closed at 80.27 on Monday.
The euro traded on a positive note and gained around 0.1 percent yesterday on the back of optimistic investor confidence data from the region. Further, weakness in the DX supported an upside in the currency. However, weak market sentiments in later part of the trade coupled with drop in German industrial production data capped sharp rise in the currency. German Industrial Production slumped by 1.8 percent in May as against a fall of 0.3 percent in April. Eurozone Sentix Investor Confidence jumped to 10.1-mark in July from 8.5-level in June. The euro is trading at 1.3603 with little activity in the last 24 hours.
Monday traders were surprised by the weakness in the Great British Pound which declined about 2% on a shift in sentiment and profit booking. The GBP is trading at 1.7130 this morning. In today’s trade, the Sterling Pound is likely to trade on a mixed note on the back of strength in the DX and rise in risk aversion in the market sentiments will exert downside pressure on the currency. While on the other hand, estimates of favorable economic data from the country will act as a positive factor. Traders will closely monitor the UK industrial production numbers due out this morning.
The Japanese yen continues to gather strength trading at 101.85 against the US dollar and at 138.54 against the yen. The Japanese Yen traded on a positive note and appreciated around 0.3 percent yesterday on the back of weak market sentiments in later part of the trade which led to rise in demand for the low yielding currency. The Yen touched an intra-day high of 101.76 and closed at 101.82 on Monday. Japan’s Current Account was at a surplus of 0.38 trillion yen in May from earlier surplus of 0.13 trillion yen in April.