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Asset classes appeared to still be marching to the beat of their own drum on Tuesday, as stocks rebounded while commodities were in the red.
What moves the markets these days?
Titles:
- BOJ core CPI in May y/y: 2.1% (1.9% expected, 1.8% previous)
- FOMC official Bowman: We have not yet reached the point where it is appropriate to cut interest rates as the data must show that inflation is moving sustainably to 2% first.
- Headline Canadian Consumer Price Index in May YoY: 2.9% (2.6% expected, 2.7% previous), May core CPI monthly: 0.6% (0.2% previous)
- US S&P CS Composite Home Price Index in May YoY: 7.2% (7.0% expected, 7.5% previous)
- US Richmond Manufacturing Index in June: -10 (-3 expected, 0 previous)
- US CB Consumer Confidence Index in June: 100.4 (100.0 expected, previous reading reduced from 102.0 to 101.3)
- Cook, the FOMC official, says current policy is “in good shape” but at some point it is appropriate to lower it
- Nvidia shares rose about 7% after falling the previous day
Broad market price movement:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Yields, Bitcoin Overlay Chart by TradingView
Market correlations were still all over the place on Tuesday, with commodities such as crude oil and gold falling while Bitcoin and US stock indices gradually rose. Treasury yields and the US dollar also ended in the green, even after tossing and turning throughout the day.
A surprise increase in private oil inventories by 900,000 versus the expected reduction of 3 million barrels as reported by the American Petroleum Institute resulted in WTI closing more than 1% in negative territory.
Meanwhile, the S&P 500 and Nasdaq paused a three-day decline when Nvidia shares closed nearly 7% higher, after… Big bounce the day beforeOther large-cap technology companies, such as Meta and Alphabet, were also able to reduce their previous losses.
Forex market behavior: US dollar against major currencies
Overlay of the US dollar against major currencies Chart by TradingView
The Asian and European trading sessions were mostly quiet in terms of first-order data printing and directional moves between the dollar pairs.
Bullish sentiment emerged in the US currency towards the end of market hours in London, thanks to hawkish comments from FOMC official Bowman who said they have not yet reached the point where it is time to cut interest rates.
However, the dollar regained some of these gains after seeing some weaker than expected average reports and some risk-on moves in the stock market. Canadian inflation numbers, which were stronger than expected, also lifted the Canadian dollar, closing marginally in the green zone.
Potential catalysts coming on the economic calendar:
- German GfK Consumer Climate Index at 6:00 AM GMT
- Swiss UBS Economic Prospects Index at 8:00 AM GMT
- US New Home Sales at 2:00 PM GMT
- US Energy Information Administration crude oil inventories released at 2:30pm GMT
- Japanese retail sales at 11:50 PM GMT
There is not much on the docket in terms of major market catalysts today, which may leave investors to take their cues from the individual drivers of each asset class once again. However, be sure to keep an eye on the headlines that influence overall risk sentiment as they may determine market trends for the day!
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