The USD strengthens, oil prices ease, equity markets ease, and US yields ease in a cautious start to the week's trading. We have seen a subdued start to Monday's trading, with investors unable to shake off Friday conflicting economic signals in the US jobs report, which showed softer payrolls growth, but wages above forecast. On the weekend Fed Governor Bowman said the policymakers may need to raise rates further in order to fully restore price stability. Ukraine's attack on a Russian oil tanker in the Kerch Straight threatened the key export route and triggered a rally in wheat prices. This week's focus will be on European and US inflation data, while intraday markets will be monitoring several Fed & BoE speakers.
In other currencies. Slovenia asks for support from the EU & NATO after devastating floods. UK house prices fall for fourth consecutive month, Halifax says. EU trade chief to push China on barriers to exports. Saudi Aramco Q2 profit drops 38% to $30.1 bln, while boosting dividends. China says Jeddah talks on Ukraine helped to 'consolidate international consensus'. Niger awaits West African bloc's response after junta rejects ultimatum. Trucker Yellow Corp goes bankrupt after debt, labor woes pile up.
In currency news. The USD edges higher heading into Thursday's US inflation data. Euro eases after German Industrial production dropped more than expected in June. China's Yuan is under pressure as foreign direct investment (FDI) falls to its lowest levels since records began 25 years ago. Russian Rouble falls to 16-month low vs USD. CNY weakens 0.2%, while Asian currencies are down 0.15% on average vs USD. Trading currencies are under pressure AUD & NZD slipping 0.1%, MXN dropping 0.25%, JPY & CHF weakening 0.4%, NOK & SEK falling 0.65%, and ZAR tumbling 0.9% vs USD.
Oil prices weaken from their 4-month highs, down 1% despite Saudi Arabia & Russia pledging to extend supply cuts through September. CAD holds steady in early trading as markets remain cautious after mixed US job data on Friday and investor focus shifts to Thursday's key US inflation data. Today sees a light US economic docket & a Canadian Bank holiday, so we expect markets to be contained within current trading ranges.
EURCAD weakens in early trading after weaker-than-expected German Industrial production and EU Sentix Investor Confidence report today.
EUR weakens towards 1.0950 after disappointing EU data. Euro came under selling pressure after a combination of weaker-than-expected German Industrial production data and Sentix Investor Confidence set a negative tone for the Euro. With the absence of any key US economic data today, we expect currency markets to be rangebound as investors look to US & EU inflation reports for direction.
GBPEUR holds steady after disappointing EU data and news that UK housing prices fall for a 4th month, focus will be on EU inflation and GBP Growth data this week.
GBP slips towards 1.2700 amid a firming USD. The pound maintained its downward trend, sliding back towards 1.2700 as bets increase for more Fed rate hikes as the focus shifts to the US inflation report this week reviving USD demand this week. The BoE's less hawkish forward guidance and today's report showing UK housing prices falling for their 4th consecutive month kept selling pressure on the pound. Today's focus will be on Fed & BoE speakers, but we expect markets to remain within current trading ranges as investors await this week's US & Eurozone inflation data.
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