The US indices and the dollar were both underpinned on Monday as a jump in 10-year bond yields as traders see that the Fed is likely to continue raising interest rates despite criticism last week from Donald Trump. Stocks were led higher by the financial sector, while investors also anticipate continued strength in corporate earnings and US economic growth, with the US Q2 GDP due for release on Friday. Elsewhere, Gold is under pressure, -0.4%, mainly due to the firmer dollar, while oil is also a little lower, -0.65%, despite the increased tension between the US and Iran.
The main focus on Tuesday will be the flash global PMIs, beginning with the Japanese Nikkei Mfg PMI and then following on to the EU and then the US. That aside there is not much else on the calendar and it looks likely to be politics that again dominates the agenda. The US will also get to see the Richmond Fed Mfg Index as well as the API weekly Crude Oil Stock Inventory, but most traders are likely to stand aside while waiting for the ECB Interest Rate Decision on Thursday and then the important Q2 GDP for Friday, which is expected to be a big number; some analysts are calling for as much as 5% qq. Don’t forget that Donald Trump and European Commission President Jean-Claude Junker meet on Wednesday for further trade negotiations.
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