Hello traders, welcome to the first European session of the week. Monday begins with notable volatility in the forex market, particularly among the antipodean currencies. Both the New Zealand Dollar (NZD) and the Australian Dollar (AUD) are demonstrating significant strength, climbing higher against their peers. On the weaker side, we observe American Dollar (USD) and Japanese Yen (JPY) struggling, creating notable moves in pairs like NZD/JPY and AUD/JPY. These pairs are rebounding sharply from midterm lows, hinting at the potential start of a bullish reversal in these instruments.
A weaker USD is offering support to commodities. Oil, which has recently hovered near local bottoms, is attempting a bounce, while precious metals are testing key resistances. Despite the differing positions of these commodities, today's overall sentiment for both is bullish. This upward momentum in commodities reflects optimism tied to the weaker dollar.
On the indices front, European markets are showing strong performance as they attempt to narrow the gap with their American counterparts, which have consistently outperformed. The positive sentiment is spreading across equities, providing a solid start to the trading week.
From a fundamental perspective, today's calendar is relatively quiet. The key data point has been the release of China's inflation figures earlier in the day. The CPI came in lower than expected, while the PPI surprised to the upside. Although these numbers had limited immediate impact, they underscore ongoing developments in the world's second-largest economy.
The focus now shifts to whether this momentum, especially in the forex market, will sustain itself throughout the week. With promising setups across asset classes, this week could bring compelling trading opportunities, making it an exciting period for market participants.