Midday Market Update: Interest Rates remain key to investor focus

Global markets were experiencing a mixed bag early European session as technical levels met fundamental headwinds. The Euro and Pound succumbed to dollar strength ahead of key FOMC member speeches due early New York session. UK PMIs can in better-than-expected while German Manufacturing orders defiled expectations. Canada will also release its PMI and Building Permits data ahead of BoC Governor Macklem’s speech.

EURUSD was down -0.13% early Tuesday morning despite positive economic data. The German manufacturing Orders came in at 8.9% vs -0.1% anticipated. The dollar continues to hold on to gains ahead of the FOMC member’s speeches.  The euro is holding steady at around 1.0722 against the dollar. On the upside, bulls are capped by the 1.0800 level. The ECB is later going to release an Economic bulletin early Thursday morning and it could affect the euro’s direction.

The Aussie gave up its earlier gains down to +0.06% against the yen, following unchanged rates by the RBA. The RBA kept rates at 4.35% and a slide in retail sales to -2.7% from 1.6% underpinned weakness in the Aussie dollar. Japan’s Household spending improved although it came in less than expected. The pair was rangebound between 96.849 high and 96.185 low.

USDCAD was flat trading at -0.03% as investors closely watched the Canadian PMIs and Building Permits. The dollar gave in its 2-day gains as the Canadian dollar mirrors a rebound in oil prices. The USDCAD was slightly down from the 1.3543 level, a 2024 high. Key levels to watch out for are 1.26354 on the upside and 1.2462 on the downside. FOMC members are scheduled to speak later in the New York session and traders should pay close attention.

US stock futures were largely mixed ahead of FOMC Member speeches.US100 was slightly higher by +0.15% although the index remains rangebound between the 17685 high and 17372.2 low. US30 is faring slightly better trading +0.41% early New York session as bulls bounced off the 38325 level and, on the upside, 38785.53 remains a key resistance. US500 soared by +0.38% as bulls attempted to break the 4977.2 high after 4903.8 remained intact. Investor sentiment remains cautious ahead of key economic data releases this week.

European stock futures were largely high boosted by positive economic data. The UK100 was up by +0.33%, while CAC40 remained flat at +0.00%. The DAX is mirroring the CAC40, trading flat 16966.51 resistance level and a break above that level could see bulls target the 17000 psychological level. In commodities, oil recovered as Mideast tensions continue to be offset by demand worries. USOIL was up by +0.66% from the 71.43 low as the bulls attempted to reclaim the 74.00 level. UKOIL soared by +0.77% and key levels to watch out for are the 76.66 support and 80.00 resistance level. Despite ongoing geopolitical tensions and potential supply disruptions, rising US inventories are putting downward pressure. Keep an eye on API inventory data later today for further direction.