Cautiously positive start to the week

Asian Markets

Asian markets began the week with a positive outlook, driven by expectations of dovish stances from central banks and favorable macroeconomic data. This optimism is significant as investors anticipate crucial announcements from financial authorities.

Currencies

the Japanese Yen emerged as one of the stronger currencies during the first part of the day. This strength is likely due to speculation that the Bank of Japan might adopt a more hawkish approach in its interest rate decision scheduled for Wednesday. Meanwhile, USD/JPY pair dropped to 153.4000.

Commodities

Oil prices rose on Monday, recovering from last week's losses. This rebound is attributed to escalating geopolitical tensions in the Middle East. As a result, the price of West Texas Intermediate (WTI) crude oil increased by 1%, reaching $77.50 per barrel.

Gold Prices

Gold continued its upward trend, trading below $2,400 per ounce during the European session on Monday. The US Personal Consumption Expenditures (PCE) Price Index, released on Friday, indicated a modest rise in inflation for June, which has led to a decline in US Treasury bond yields, weakening the USD and supporting gold prices.

Geopolitical risks from Middle Eastern conflicts are also bolstering the appeal of gold as a safe-haven asset. However, the positive sentiment in global markets is capping gold's gains. Traders are awaiting the outcome of the two-day Federal Open Market Committee (FOMC) meeting on Wednesday, as well as key US macroeconomic data, including the Nonfarm Payrolls report, which will influence the commodity's future direction.

Key Economic Events and Predictions

This week holds potential for significant market movements. Investors are closely watching the Federal Reserve's decision on Wednesday, where inflation is expected to stabilize, potentially setting the stage for interest rate cuts at the September meeting. In Japan, the BoJ is anticipated to outline a quantitative tightening plan after prolonged easing, with a 30% chance of a 10 basis point rate hike.

Economic Data Release Schedule

• 01:00 pm BST - UK, retail sales for July
• 03:30 pm BST - USA, Dallas Fed index for July