The financial calendar is full today with US data releases such as the PMI, new homes sales and consumer confidence. Traders will be focusing on whether the US consumers feel more pessimistic following Brexit. Also, the market will prepare itself ahead of the important FOMC meeting tomorrow. There are no expectations for a rate hike, however there is “risk” of the FE sounding hawkish which could result in a strong USD.
Currencies: The USD dropped ahead of tomorrow’s FOMC, while the JPY gained massively overnight despite expectations that the BoJ will ease monetary policy this Friday. USDJPY dropped from 106.70 highs yesterday, to 104.40 at time of writing. Sentiment was also subdued by news that 19 people were killed and dozens injured in a knife attack allegedly by a former employee at a facility for the disabled outside of Tokyo. The GBPUSD dropped to 1.3080 from 1.3160 yesterday after a survey showed a gloomy picture of the UK manufacturing sector.
Stocks: Overnight, U.S. stocks retreated from record territory on Monday, taking a pause from their month-long hot streak, as oil slipped to three-month lows weighing heavily on the major indices on Wall Street. The Dow fell 77.79 or 0.42% to 18,493.06, suffering just its second losing session over the last 12 trading days. The S&P 500 Composite index, meanwhile, lost 6.55 or 0.30% to 2,168.48, falling from record closing highs from the end of last week. The Nikkei 225 fell 1.55% as plans reported by Nikkei that Japan is likely to inject $57 billion in direct fiscal outlays into the economy over the next few years failed to excite the market.
Oil and Gold: Oil futures ended at their lowest level since late April as steady growth in the number of active rigs drilling for oil in the U.S. fueled expectations of stronger production. In addition to weekly oil inventories data from the U.S. Wednesday, investors this week will be keeping a close eye on two major central banks — the Bank of Japan and the FED — for their decisions on interest rates and outlooks on their respective countries. The yellow metal has made a low of $1312.05 yesterday and slightly jumped from that level. It is currently trading around $1318.82. Major resistance lies at $1330 now.