• The waiting game continues
• ECB’s Lane: We are not pre-committing to a particular rate path
• ECB’s Lane: We will be agile on interest rates
• ECB’s Rehn: Monetary policy has dampened price pressures
• ECB’s Villeroy: We have leeway to lower rates before exiting restrictive stance
• BOJ to begin tapering bond purchases at this week’s meeting – poll
• UK April ILO unemployment rate 4.4% vs 4.3% expected
• US May NFIB small business optimism index 90.5 vs 89.7 prior
• China premier Li Qiang is to visit Australia later this week
• OPEC maintains 2024 oil demand growth forecast in latest report

Markets:

• GBP leads, EUR lags on the day
• European equities lower; S&P 500 futures down 0.3%
• US 10-year yields down 3.2 bps to 4.437%
• Gold down 0.2% to $2,306.94
• WTI crude down 0.2% to $77.58
• Bitcoin down 3.9% to $66,909

It was a slower session once again as markets are finding it tough to have any convictions before the main events later this week.

The euro was lower, carrying over the softer mood from yesterday. The political worries continue to permeate, weighing again on European stocks as well after a light bounce at the open. EUR/USD is down 0.3% to 1.0730 while EUR/GBP is down to nearly two-year lows at 0.8420 levels currently.

Besides that, major currencies were less enthused with the dollar keeping steadier overall. USD/JPY is flat and continuing to hug near the 157.00 level.

In the equities space, US futures are nudging lower as the push and pull continues ahead of tomorrow’s CPI and Fed showdown. As for the bond market, yields are tracking back a little after the rise yesterday. So, the mix of all that isn’t giving traders much firm direction so far this week.

The waiting game continues ahead of the key risk events on the week. The happenings tomorrow should help to kick things into gear. But until then, we’ll just have to wait for a bit more.

This article was written by Justin Low at www.forexlive.com.

To balance their outlook, they raised to Q2 2024 forecast by 50k bpd instead. That sees the total 2024 world oil demand growth forecast unchanged at 2.25 mil bpd. For 2025, that figure is also left unchanged at 1.85 mil bpd.

This article was written by Justin Low at www.forexlive.com.

• Still have many degrees of flexibility to react to upside or downside shocks
• Have a good degree of confidence at arriving at 2% inflation target

As much as he is trying to sell that they are flexible, there’s only one outlook on their policy stance right now. And that is for lower rates. That especially since the economy, while resilient in Q1, is still relatively soft.

This article was written by Justin Low at www.forexlive.com.

• Rates are to stay sufficiently restrictive for as long as needed
• There is still high level of uncertainty
• Price pressures are still elevated and is evident in indicators for domestic inflation
• Economic activity is recovering

This is mainly a rehash of Lagarde’s remarks from last week. Don’t expect anything different from the ECB until we get to the July meeting.

This article was written by Justin Low at www.forexlive.com.

The USD came back with a
vengeance last Friday following the strong US NFP report where the data surprised with solid job
and wage growth. There were also negatives like the uptick in the unemployment
rate, but all in all, we can say that it was a good report.

The data triggered a
hawkish repricing in interest rates expectations with the market now expecting
once again just one cut by the end of the year. It’s not a big deal in the
bigger picture, but for now the sentiment is bullish for the greenback and we will
likely need a catalyst to change it again.

The AUD, on the other hand,
has been supported by a slightly more hawkish RBA and the positive risk
sentiment due to the pickup in global growth. Moreover, the pickup in China’s
economy is generally good news for the Aussie as well as it’s Australia’s
biggest trading partner. If we go back into risk-on sentiment, the greenback
could start to lose ground again.

AUDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that AUDUSD dropped back into the bottom of the recent range around the
0.66 handle where we can also find the 38.2% Fibonacci
retracement level of the entire rally since the end of April.

This is where we can expect
the buyers to step in with a defined risk below the support
to position for a rally into new highs with a better risk to reward setup. The
sellers, on the other hand, will want to see the price breaking lower to gain
even more conviction and target the 0.6464 level next.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action between the 0.67 resistance and
the 0.66 support. The US CPI report tomorrow will likely decide where we are
going to go next as hot data should give the USD even more strength and send
the pair lower, while soft figures will likely weaken the greenback leading to
a rally in AUDUSD.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that from a risk management perspective, the sellers will have a better
risk to reward setup around the 0.6630 resistance where they will also find the
38.2% Fibonacci retracement level of the recent drop.

The buyers, on the other
hand, will want to see the price breaking higher to gain even more conviction
and increase the bullish bets into new highs. The red lines define the average
daily range for today.

Upcoming
Catalysts

This week is a bit empty on the data front although we will
have the biggest market moving events tomorrow when we get the US CPI data and
the FOMC rate decision. On Thursday, we have the US PPI and the latest US
Jobless Claims figures. On Friday, we conclude the week with the University of
Michigan Consumer Sentiment survey.

This article was written by Giuseppe Dellamotta at www.forexlive.com.