Safe-haven flows dominate the action in financial markets at the beginning of the new week as tensions in the Middle East escalate further.
The economic calendar will not feature any high-tier macroeconomic data releases on Monday, while during Asian trading on Tuesday, trade balance data from China will be watched closely by market participants.
This will be followed by the highly-anticipated June inflation report from the US and Federal Reserve Chairman Kevin Warsh’s testimony before the House Financial Services Committee in Washington.
The US Central Command (CENTCOM) announced on Sunday that it launched strikes against dozens of Iranian military targets for the second consecutive day, with an aim to further weaken the Islamic Republic’s ability to strike civilian vessels transiting the Strait of Hormuz.
Meanwhile, Iran said that it hit US military sites in Bahrain, Kuwait, Oman and Jordan, in retaliation to the US’ renewed aggression. Crude oil prices opened with a bullish gad and the barrel of West Texas Intermediate was last seen trading near $74, rising about 3.5% on the day.
The dollar also benefits from the souring market mood, with the DXY Dollar Index staying in positive territory slightly above 101.00, while US stock index futures lose between 0.3% and 1.4% on the day.
The Fed released its Semiannual Monetary Policy Report in the American session on Friday, with the US central bank noting that inflation remains elevated, driven by tariffs and factors related to the Middle East war and AI.
Regarding the labour market conditions, “a marked slowdown in immigration and ongoing declines in labor force participation due to the aging of the population led to a slowdown in labor supply growth,” the document said.
EURUSD stabilised at around 1.1400 following the bearish action seen in the Asian trading hours on Monday.
GBPUSD corrected lower and trades below 1.3400 after posting marginal gains in the previous week.
Gold started the week under bearish pressure and XAUUSD trades near $4,050, losing more than 1.5% on a daily basis.
Silver struggles for the second consecutive day, trading around $58.20 per troy ounce on Monday, as technical analysis shows that the spot price remains within the descending channel pattern, suggesting a prevailing bearish bias.
USDJPY gained traction following Friday’s sharp decline and traded at around 162.20 on Monday, up about 0.3% on the day.
(Source: OANDA)
