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02/07/2024 - 07:10 UTCThe U.S. dollar traded between gains and losses against most major currencies on Monday, finally ending the session in positive territory, with the dollar index (USDX) hovering around the 105.6 mark. All eyes now turn to Friday's non-farm payrolls report for clues on when the Fed will begin rate cuts. Economists are expecting the U.S. economy to have added 189,000 jobs in June after a larger than forecast gain of 272,000 the previous month.
The CME FedWatch tool sees a September rate cut as the most probable outcome, with a near 60% chance. November cuts follow closely at around 51%.
In other news, the euro climbed on Monday after Marine Le Pen's far-right National Rally party won the first round of France's parliamentary elections on Sunday by a large margin, according to exit polls. Analysts noted it won a smaller share of the vote than some polls had initially projected, however it led to a surge in stock and bond prices.
In the energy sector, the two main benchmarks WTI And Brent continue their ascend, adding approximately 2% to their values on Monday, benefiting from stronger-than-expected Chinese manufacturing activity data, suggesting a recovery in the world’s second-largest economy and major crude importer.
The main U.S. stock indices painted a mixed picture on Monday, hovering near record highs, as investors await key jobs data later this week. In corporate news, Boeing stock rose 2% after the aircraft maker agreed to buy Spirit Aerosystems ending a lengthy pursuit that was complicated by contracts Spirit had with Boeing's main rival Airbus. Nvidia showed little change after Morgan Stanley said it still sees upside, lifting its price target on the company.
Aside from the nonfarm payrolls report, this week brings other key economic data including the JOLTS job openings due on Tuesday where a decline is expected, the Fed minutes on Wednesday, and Fed Chair Powell's speech at the ECB forum. Some price action could also observed upon the release of inflation numbers from the Eurozone and a speech by ECB’s Lagarde.
The EUR/USD pair reached a new multi-week high above 1.0770 on Monday but was pushed back down due to a broad-market shift in investor sentiment.
The German Consumer Price Index (CPI) figures released early Monday showed a broad miss, as the annualized CPI for Germany dipped to 2.2% in June, down from the previous 2.4% and falling short of the forecasted 2.3%. In addition, the US ISM Manufacturing Purchasing Manager Index (PMI) figures for June also declined, dropping to 48.5 from 48.7 and entirely missing the forecasted increase to 49.1. Furthermore, US ISM Manufacturing Prices experienced a sharp decline in June, falling to 52.1 from the previous 57.0.
On Tuesday, key European data will be released, along with a series of speeches from European Central Bank (ECB) policymakers, including another address from ECB President Christine Lagarde.
On the US side, investors will be looking ahead to Tuesday’s appearance from Federal Reserve (Fed) Chairman Jerome Powell, followed by ADP Employment Change figures on Wednesday and Friday’s latest iteration of US Nonfarm Payrolls (NFP) and Average Hourly Earnings for June.
Gold prices experienced a slight increase on Monday, supported by short covering from investors. Attention has shifted to the forthcoming U.S. jobs data, which is expected to provide insights into potential interest rate cuts by the Federal Reserve.
In June, U.S. manufacturing saw a third consecutive month of contraction. Additionally, a gauge of prices paid by factories for inputs fell to a six-month low due to weak demand for goods, signalling the possibility of further declines in inflation.
This week, the focal points will be U.S. Fed Chair Jerome Powell's remarks on Tuesday, the release of minutes from the central bank's latest policy meeting on Wednesday, and the eagerly awaited U.S. non-farm payrolls data due on Friday.
Oil prices gained about 2% to a two-month high on Monday on hopes of rising demand during the Northern Hemisphere's summer driving season and worries that conflict in the Middle East could spread and reduce global oil supplies.
Israel and Iran-backed Hezbollah have been trading fire since the start of the Gaza war, and concern is rising that an all-out war could break out between the two sides.
This positive tone was extended Monday after Chinese manufacturing activity grew more than expected in June, private purchasing managers index data showed on Monday.
Traders are also watching for the impact hurricanes have on oil and gas production and consumption in the Americas.
The major stock indices have begun the new week on a positive note, building on the gains observed in the previous quarter, despite the week being shortened due to the Independence Day holiday. On Monday, the US 500 closed higher, with technology stocks leading the way as the market entered the second half of the year with optimism ahead of an important monthly jobs report expected later in the week.
Boeing stock rose nearly 3% after the aircraft maker agreed to buy Spirit Aerosystems, up 3.4%, for $4.7 billion, ending a lengthy pursuit that was complicated by contracts Spirit had with Boeing's main rival Airbus. Tesla Inc jumped 6% just ahead of its second-quarter delivery numbers expected on Tuesday.
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