In yesterday's US trading, there was a brief moment of concern that risk trading would stall. However, at the end of the day, the more optimistic mood was restored as stocks closed higher. If this continues, we will see gold fall further today to $2,300. This occurred amid a change in short-term sentiment over the previous day, as noted here.
In the foreign exchange market, the dollar continues to maintain a relatively comfortable position. Resource currencies got off to a decent start this week, but their gains against the dollar were not particularly noteworthy. Meanwhile, USD/JPY continues to hover around the 155.00 mark pending more important data releases this week. Is Icarus flying too close to the sun?
PMI data will be in the spotlight when it comes to trading today. The eurozone and UK announcements should not have a major impact on the outlook for the ECB and BOE, respectively. That is, unless there are major surprises in the survey results. But all else being equal, the ECB is on track for a June policy decision, and the BOE is likely to keep the door open for an August policy decision.
Looking at market odds, traders believe there is about a 67% chance that the ECB will cut interest rates in June. Traders are fully pricing in the BOE's move in August, but see a roughly 62% chance of a move in June. We didn't expect those odds to change so dramatically today. But let's see.
Otherwise, the US PMI statistics released later today are likely to have a bigger impact.
0715 GMT – France April preliminary manufacturing, services and composite PMI
0730 GMT – Germany Latest Manufacturing, Services and Combined PMI for April
0800 GMT – Eurozone April Manufacturing, Services and Comprehensive PMI
0830 GMT – UK April Flash Manufacturing, Services and Comprehensive PMI
That's all for the upcoming sessions. We wish you all great days ahead and good luck in your dealings. Stay safe.