1. Forex Preview: USD Surges on Renewed Trade Optimism
The US dollar surged higher against key rivals as the urgency for a Fed rate cut was reduced by the latest positive developments on US/China trade relations. The greenback added more than 0.75% against the safe haven Swiss Franc as of 7:45 GMT this morning. The USD/JPY and the USD/NZD also added 0.5 percent as of 7:45 GMT. Elsewhere, the EUR broke out of its stuck range to the downside and could be heading towards testing the 1.13 level now.*
2. EU Markets Open Higher
On Monday European bourses surged at EU open as U.S. President Donald Trump and Chinese President Xi Jinping agreed to hold off on additional tariffs in a bid to reignite trade talks. Donald Trump has proven his ability “to work his magic” and the highly anticipated meeting between Xi and him at the G20 summit turned out to be a positive one; the US has also resolved not to add further tariffs and ease some bans on Huawei. Even Hu Xijin tweeted ” This is a breakthrough. ” and the surprise Trump-Kim meeting at the DMZ in North Korea made the positive PR of this past weekend perfect. Risk markets reacted right away and opened with gaps to the upside ignoring a multitude of negative economic data out of China and Japan.**
3. NFP to Push USD Higher?
The manufacturing industries seem to be in an especially bad shape economically, therefore the ISM out of the US this afternoon should be closely observed. We are generally in for packed week with lot of data like OPEC and RBA interest rate decision (rate cut?) and NFP on Friday coming up. Fed signals on rate cuts might further push the USD lower. ***
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4. Oil Prices Surge +2.9%
Elsewhere, Oil prices rose more than $1.7 a barrel on Monday after Saudi Arabia, Russia and Iraq backed an extension of supply cuts for another six to nine months ahead of an OPEC meeting in Vienna. Crude WTI and Brent added 2.9% as of 7:50 GMT this morning despite a stronger dollar.****
5. Gold and BTC Remain Subdued
Meanwhile gold remained subdued as risk appetite resurfaced. Spot gold is likely to see further downside in this risk-on environment, with its next immediate support at around $1.365-1.377. Elsewhere, bitcoin tried to reach 12k repeatedly this weekend but also had to face setback down to the $10.400 which seems to be the key support that needs to stay unbroken if we are to expect further upside potential; otherwise, a correction back down to 8k may also be possible. *****
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*CNN Jul 1, 2019 2:48 AM ET
**Reuters Jul 1, 2019 3:53 AM ET
***FXStreet Jul 1, 2019 03:07 AM ET
****Bloomberg Jul 1, 2019 06:13 AM ET
*****Bloomberg Jul 1, 2019 07:42 AM ET