The S&P500 closed at a new high yesterday for the third consecutive session. Subdued volatility helps equities bullish run while the currency market consolidates in tight ranges.
June turned out to be a positive month for the equities market, despite the Fed sending a hawkish message at its last meeting. The correction following the FOMC statement was quickly reversed in a few sessions and then new highs were recorded by the S&P500 and the Nasdaq 100.
The lack of volatility and of important economic data bodes well for equities, while the currency market moves in very tight ranges. Commodities are pretty much unchanged on the day, with precious metals and gold holding their recent ranges. Oil hovers above $70 in a wait-and-see mode ahead of the OPEC+ meetings that start this week.
Christine Lagarde, the European Central Bank President, is due to speak later today at the Brussels Economic Forum. The euro pairs traded with a bid tone after the Fed meeting two weeks ago, despite the dovishness expressed by the ECB and the divergences between the monetary policies in the two jurisdictions.
Markets to Watch
S&P500, EUR/JPY, USD/CAD– markets in focus today.
The S&P500 index has ended a triangular consolidation and it broke above its upper trendline. The recent bullish price action had no retracements and summer trading conditions in the months ahead suggest more upside possible for the US equities.
The EUR/JPY cross pair has bounced from 130 in the aftermath of the June Fed meeting. However, on its way higher, it retested the neckline of a head and shoulders pattern, and now the bearish sentiment returned. The 130 level is critical for the EUR/JPY cross – while above, it remains bullish on the medium term.
The USD/CAD has an interesting technical picture. It formed either a rounding bottom or a cup and handle formation, both bullish patterns. The next level to watch is 1.25, and a daily close above suggests the cup and handle formation ended, and a new trend started.
Winners and Losers
Just like yesterday, US equities trade with a bid tone, making new all-time highs on a daily basis. The Canadian and Australian dollars are weak.