A potentially huge week for trading action saw the first really big moves occur in the gold market. Gold rallied from near $1,185 up through $1,200 in the US morning then gave pretty much all of it back by the end of the US trading session. Gold took off early on with weekend comments from Greece’s PM complaining about unreasonable creditor demands raising concerns about a default and sparked a rally. As the day progressed, word came that the creditor group are working on a united proposal. Meanwhile, positive PMI data out of the US sent USD soaring and knocked gold back. News that the ECB remains behind schedule on its QE purchases didn’t help gold either. Gold may remain a crucible for changes in trading sentiment and thus active through this entire week. The better than expected US manufacturing PMI headline numbers helped to support stocks as well as the greenback. The most important part of the report though was the prices paid (inflation) component which really took off, indicating that as oil prices have rebounded, deflationary pressures have receded as the Fed had projected they would. With inflation starting to rise again, strong payroll reports this week could put pressure back on the Fed to move up its timetable for interest rate liftoff. Oil related markets have also been active today. Both WTI and Brent have dropped back a bit today in a normal trading correction following Friday’s big rallies. NOK was the currency most impacted today, especially relative to CAD. Not only did Brent fall more than WTI, but Norway’s manufacturing PMI fell off a cliff and dove well into contraction territory. The US inventory inspired rally appears to be running out of gas. Oil could be volatile and may generate trading opportunities through the week heading toward Friday’ OPEC meeting particularly if Saudi Arabia tries to get non-OPEC countries on its side like Russia. At this point, it looks like OPEC may keep its supply war going. Wheat has also been active in commodity trading rising 3.0% on growing crop concerns for the US after a period of too little rain was followed by too much rain. With the exception of the flying greenback, AUD and NZD have been the two top performing majors today. A big leap forward for Australian manufacturing PMI helped boost the dollars yesterday. Today the focus is on the RBA’s monthly meeting. The central bank is expected to hold interest rates steady having cut its cash rate last month. AUD has been under pressure for the last several weeks having dropped from near $81.75 toward $0.7600 in the last three weeks. Based on this it will be interesting to see Governor Stevens continues to complain about the dollar being overvalued and talk it down or not. AUD could be active through the week with GDP and other economic reports on the way as well. INR and the Nifty Fifty may also be active today with the RBI expected to deliver an interest rate cut. Tomorrow in Europe could be active again with employment figures due from Spain and Germany and likely more Grexit noise. It’s a quieter day for US news but we may see traders position ahead of Wednesday’s ADP payrolls report. Corporate News There are no major corporate announcements today. Economic News Significant announcements released overnight include: US construction spending 2.2% vs street 0.8% vs previous 0.6% US personal income 0.4% vs vs street 0.3% US personal spending 0.0% vs street 0.2% US PCE core inflation 1.2% vs street 1.4% Germany consumer prices 0.7% unchanged Sweden retail sales 3.0% vs street 3.2% Australia commodity prices (19.5%) vs previous (20.5%) Australia inflation 1.4% unchanged Australia building approvals 16.3% vs street 20.5% Japan Q1 capital spending 7.3% vs previous 2.8% Manufacturing PMI reports: US Markit 54.0 vs street 53.8 US ISM 52.8 vs street 52.0 US ISM prices paid 49.5 vs previous 40.5 Canada 49.8 vs previous 49.0 Brazil 45.9previous 46.0 UK 52.0 vs street 52.5 and previous 51.9 Eurozone 52.2 vs street 52.3 Germany 51.1 vs street 51.4 France 49.4 vs street 49.3 Italy 54.8 vs street 53.6 Spain 55.8 vs previous 54.5 Sweden 54.8 vs previous 55.7 Norway 46.6 vs previous 50.5 Upcoming significant announcements include: 2:30 pm AEST Australia interest rate 2.00% no change expected 3:30 pm AEST India interest rate 0.25% cut to 7.25% widely expected 8:00 am BST Spain unemployment change street (116K) 8:55 am BST Germany unemployment chnge street (10K) 8:55 am BST Germany unemployment rate street 6.4% 9:00 am BST Greece manufacturing PMI previous 46.5 9:30 am BST UK construction PMI street 55.0 2:00 pm BST Singapore PMI street 49.3 2:00 pm BST Singapore electronics street 49.5 10:00 am BST Eurozone consumer prices street 0.2% 10:00 am BST Eurozone core CPI street 0.7% 10:00 am BST Eurozone producer prices street (2.0%) 10:00 am EDT US factory orders street (0.1%)
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