The USD is slightly lower, oil prices hedged up while equity markets and US bond yield are flat. With the USA off celebrating their Independence Day, we expect limited trading activity. Market participants will start focusing on Wednesday FOMC minutes and Friday's US employment figures as it may give clues as to the FED's future action. Hawkish ECB remarks as well as the uncertainty about the FED tightening peak are keeping the Euro under 1.1000. The JPY is under some selling pressure to start the day despite the potential of a BOJ intervention. Canada will be releasing its business outlook survey and Global Manufacturing PMI later this morning.
In other news China's commerce ministry said it would control the export of some gallium and germanium products (metals commonly used in the making of semi-conductors and electric vehicles) to protect national security. This is seen as a retaliatory measure to the US-China chip dispute. Russia accuses Ukraine of attempting a 'terrorist' drone attack.
In currency markets The USD is weaker across the board against the APAC currencies with the NZD strengthening 0.57%, AUD 0.22%, CNY 0.30%, THB 0.40%. Other trading currencies such as the SAR is up 0.62% and MXN 0.37%. RBA's held the interest rate at 4.10% as it assess the impact of recent hikes on the inflation, but warned that further tightening may be needed.
The C$ is benefiting from a general weakness of the USD as well as a a 1% move higher in oil price. Today's Business outlook and PMI will be important as to the direction of the currency pair.
EURCAD trades lower this morning as the C$ benefits from the rise in oil prices.
EUR starts the day slightly lower. German trade surplus declined in May while Spain's unemployment decreased by 50K last month.
GBPEUR hedging lower this morning retreating from the monthly high reached last week. Market has started to focus more on economic growth expectation rather than interest differential - which could lead to a lower EURGBP.
GBP remains choppy as investors await the key Service PMI number after better than expected Manufacturing PMI data. Household demands remains strong despite the rate increases with inflation sticky at 8.5%.
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