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Yen and Gold Gain On Tensions in Korean Peninsula

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USD

The US dollar had a mixed performance as traders were out on the 4th of July holiday. Markets reopen today and the factory orders report is due, with analysts expecting to see a larger 0.4% decline compared to the earlier 0.2% dip. The FOMC minutes are also lined up and this should provide clues on when the Fed might hike rates next or start unwinding their balance sheet.

GBP

The Sterling pound edged lower to one-week low and dipped to $1.2918 yesterday as Britain's construction sector showed growth cooling in June. In addition, British new car registrations fell by an annual 4.8pc in June. As markets are waiting UK's services PMI, which will be release today, a negative UK services PMI reading could not surprise traders, after the recent poor construction PMI and manufacturing readings.

EUR
The euro was mostly weaker for the day after the Spanish unemployment change report fell short of estimates. Unemployment fell by 98.3K versus the projected reduction of 120.3K and the earlier 111.9K drop. Final services PMI and retail sales data are lined up today.

JPY

The yen was one of the weakest performers for the day as jitters over the North Korean missile test launch weighed on the Asian currency. The BOJ core CPI rose from 0.2% to 0.3% as expected. There are no reports due from Japan today but bond yields could continue to push yen pairs around.

Gold

Gold prices edged up yesterday, supported by a ballistic missile test by North Korea, raising geopolitical tensions and boosting bullion's safe-haven appeal. The yellow metal rose as much as 0.3% to settle at $1,223.37 by 13:45 GMT, while U.S. gold futures surged by 0.3% to settle at $1,222.60. Technically, the yellow metal is expected to test resistance at $1,231 during the next period.

Oil

Oil prices declined as oil exports by OPEC rose for a second month in June, despite efforts to cut production. However, the recent geopolitical tensions in the Middle East and the Korean peninsula could boost the prices. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures fell as much as 6 cents to settle at $47.02.

The most important economic events:

  • USD FOMC Meeting Minutes (JUN 14): (GMT 18:00) 

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