Wall Street is opening higher, following the lead of equity indices the world over. Any concerns about rising global trade tensions have been pushed to the back burner. Traders are looking ahead to expectations of upcoming strong earnings reports which is driving stock markets higher. The Dow Jones Industrial Average is up 125.21 points (0.51%), and the S&P 500 has gained 0.25% (as of 14:15 GMT).
The US dollar extended overnight gains but has bounced off its best levels. EURUSD bottomed out at 1.1690 and is trading at 1.1710, being supported by long-term expectations for an end to quantitative easing and higher interest rates. However, the rising risk of a trade war between the US and the Eurozone keeps the downside in focus. The US dollar index is bouncing between support at 93.75 and resistance at 94.50.
President Trump is attending the NATO summit on July 11-12, and he has threatened to pull out of the defence treaty if members don’t contribute more to the organisation's budget. Inflammatory rhetoric could spark safe-haven demand.
There isn’t any top-tier US data available today. The Job Openings and Labor Turnover Survey (JOLTS) reported: “Job openings edged down to 6.6 million on the last business day of May. Over the month, hires and separations were little changed at 5.8 million and 5.5 million, respectively.”
On Wednesday, the Bank of Canada is expected to raise rates by 0.25% and release the quarterly Monetary Policy Report. Governor Stephen Poloz was relatively optimistic in his outlook for the Canadian economy, in a recent speech. Improvements in the pace of domestic inflation, employment and GDP growth suggest that the MPR forecast may be upgraded. The North American Free Trade negotiations is an obstacle. However, Poloz said that policy decisions could not be made from headlines but only from economic data. A hawkish statement and upgraded forecasts would drive USDCAD towards major support at 1.2950.