Talking Points

  • All Asian markets stayed in the green Monday
  • This was despite the impending start of Brexit talks and news of yet another terror attack in London
  • The Dollar inched higher, but Sterling and the Euro were quite calm

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Asian markets started the week quite strongly despite the looming start of Brexit talks and what looks like yet another terror attack in London.

With the US Federal Reserve’s June interest rate decision out of the way risk appetite seems to endure, in Asia at least. The Nikkei ended up 0.6% with all other Asia/Pacific bourses in the green too. Chinese indexes got some support from news that home price rises had slowed, although the market remains buoyant.

In the foreign-exchange space the US Dollar made modest upward progress, as markets eye at least one more interest rate increase from the Federal Reserve this year. New York Fed President William Dudley is due to speak later in Pittsburgh. Investors reportedly hope he may shed a little light on this prospect. Meanwhile the Euro showed little initial reaction to news that French President Emmanuel Macron’s party or its allies had achieved a majority in parliamentary elections. However, EUR/USD perked up as European trading started.

Brexit talks finally get under way in Brussels later Monday, but the British Pound was relaxed in the runup. The New Zealand Dollar also rose through the session, but it did so quite a long time after the release of positive consumer confidence and service sector numbers which, in any case, don’t often move the market.

Other Asian data showed a surprise shortfall for Japanese trade, albeit in a release that was quite strong in the breakdown. Reserve Bank of Australia Governor Philip Lowe stuck to well-worn ground in his Monday speech, although he did fret that slow wage growth in Australia might be something we have to get used to.

Crude oil prices lost about 14 cents/barrel in the caser of both the US benchmark and international Brent as a relentless expansion in US drilling weighed on prices yet again. Gold prices fell modestly in the face of a rising US Dollar but hit a new four-week low of $1,250.80/ounce as it did so.

There's very little scheduled economic data due for the remainder of the global session, with Eurozone construction output likey to top a thin bill.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX