Markets turned risk-averse at the beginning of the week as geopolitical tensions in the Middle East escalate further following the US bombing of several Iranian nuclear sites over the weekend.
Preliminary June Purchasing Managers Index (PMI) data releases from the Eurozone, the UK and the US will be featured in the economic calendar on Monday. Policymakers from the European Central Bank and the Federal Reserve will also be delivering speeches throughout the day.
Oil prices shot higher at the weekly opening after Iran’s parliament approved a measure to close the Strait of Hormuz, a key sea passage through which around 20% of world oil and gas demand flows, in response to the US attacks. The final decision will be taken by the Supreme National Security Council.
Although Iran’s attempts to block the Strait of Hormuz remained short-lived in the past, with the US Navy taking action quickly, oil prices rose sharply early Monday. After climbing above $77 a barrel in the Asian session, the West Texas Intermediate crude oil corrected lower and was last seen trading at around $74.50.
The DXY Dollar Index started the week with a bullish gap before retreating slightly, trading in positive territory at around 99.00.
On Tuesday, Fed Chairman Jerome Powell will deliver the semi-annual Monetary Policy testimony to Congress. Meanwhile, US stock index futures trade flat in the European morning.
Gold advanced toward $3,400 early Monday after losing nearly 2% in the previous week. XAUUSD edges lower to start the European session and holds slightly above $3,350.
Data from Australia showed that the S&P Global Composite PMI improved to 51.2 in June’s flash estimate from 50.5 in May, suggesting business activity in the private sector expanded at an accelerating pace. AUDUSD remains on the back foot despite the upbeat data and trades in negative territory below 0.6450.
EURUSD holds steady at around 1.1500 in the early European session on Monday.
The HCOB Composite PMI in Germany rose to 50.4 in June (preliminary) from 48.5 in May. Later in the day, ECB President Christine Lagarde will make an introductory statement at a hearing before the Committee on Economic and Monetary Affairs of the European Parliament in Brussels.
GBPUSD fell nearly 1% in the previous week and edged lower in the Asian session on Monday. The pair rebounds from daily lows and trades near 1.3450.
USDJPY gains traction on Monday and trades at its highest level since mid-May above 147.00.
(Source: OANDA)
