US equities lead Asian markets higher
US equities rallied last night as July Personal Income rose 0.3% month on month, in line with consensus. The positive sentiment has spread over across Asian markets this morning, as futures markets have generally moved higher.
The Dollar index closed flat on Monday, while gold and silver rebounded from a two-month low. WTI Crude oil prices are consolidating near $47 a barrel, with the immediate resistance and support levels at $49 and $46.3 respectively.
A series of Consumer confidence and Consumer Price Indices from the European markets will influence market sentiment today.
Japanese yen weakened on hopes for more easing
USD/JPY rebounded for a second day to a two-week high, after the Federal Reserve Chairman hinted on Friday that the case for an increase in the federal funds rate has strengthened in recent months. As a result, USD has strengthened against almost all of its major peers, among which JPY and EUR have fallen the most against the greenback.
Bank of Japan Governor Kuroda has also said that the BOJ won’t hesitate to take action to meet inflation goals during the weekend. His statement was on the back of five-consecutive months of negative CPI readings, which showed clearly that inflation is falling behind policy marker’s 2% target. Anticipation of more easing from the BOJ in the September meeting has reinforced the rally of USD/JPY. The next resistance level for USD/JPY is around 103.50 area.
Friday’s non-farm payrolls in focus
According to Yellen’s speech, the Federal Reserve’s rate-hike decision is largely based on three main indicators: the performance of the labour market, economic activity and inflation. In light of strong jobs reports over the last two months, the likelihood of an impending rate hike has substantially increased. The market’s focus has now turned to non-farm payrolls this Friday, which is set to be a key determinant of the Fed’s rate-hike decision in September.
Crude Oil West Texas Oct 2016
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