Here comes the biggest week of the Year. RBA, Draghi, US non-farms and the 4th of July.

June 30, 2014

After two weeks where there were hardly any decent catalysts for trade this week is jam packed with. This is particularly the case given that with the 4th of July weekend shortening the US trading week and dragging the non-farm payrolls into Thursday – when Mario Draghi and the ECB will announce their decision.

Thursday looms as a huge night for FX traders.

Why should the ECB should be starting quantitative easing if it wants to forestall deflation and get the economy going?

Looking at the Euro’s chart it would need to break above the 200 day moving average to kick on but I’d prefer fading any strength this week – unless or until that level breaks.

200 day moving average at 1.3670 the key.

Anyway Euro is likely to have its biggest move, maybe break on Thursday.

But looking back on Friday night we see that after a topsy-turvy night’s trade in the US, the Dow dragged itself back into the black up 0.03% to 16,852, the Nasdaq was 0.43% higher and the S&P 500 was up 0.19% to 1,961. Datawise, the only release was the Uni of Michigan consumer sentiment which printed 82.5 against 82 expected – a solid result.

Across the Atlantic there was finally a positive economic surprise in France with consumer spending up 1% in May. But Q1 GDP printed 0% growth taking the year-on-year rate to just 0.7%. In the UK GDP was a smidge lower at 3% year-on-year and 0.8% on the quarter. EU consumer confidence printed at a disappointing -7.5 while German CPI came in at 0.3% in June for a 1% tone.

– At the close, the FTSE was 0.34% higher with the London Stock Exchange announcing plans to buy US index group Frank Russell for $2.7 billion. The DAX was up 0.1% to 9,815 and the CAC fell 0.06%. In Milan, stocks fell 0.3% while in Madrid, Spanish shares fell 0.26%.

The local market saw September SPI 200 futures rise 8 points to 5,421 after the physical market was lower on Friday. Iron ore was lower by $1.50 tonne Friday night which may slow the miners down a little today.

On Currency markets, the US dollar lost ground across the board as the yen crosses drove a number of markets. The euro has rallied up to 1.3647 while sterling is up at 1.7039 and the Aussie sits at 0.9422.

The Aussie has plenty of data and the RBA to catalyse traders thoughts this week and it will also be buffeted by the big macro moves associated with the US dollar and Euro. As much as the world seems to love Aussie again at the moment the weekly and daily rallies need to get on with it as they are losing momentum.

C’mon – can the Aussie break higher?

On Commodity markets, Iron Ore dropped back $1.50 tonne to $95.75 for September 62% Fe swaps. Newcastle Coal rose 40 cents to $71.35. Nymex Crude sits at $105.75, Gold is largely unchanged but not through the big down trend yet at $1,315.40 while Silver is at $20.91 oz. Copper is at $3.15 lb while Corn was unchanged, Wheat rose 0.52% and Soybeans 0.35%.

On the data front, TD inflation is out for June this morning along with HIA home sales and private sector credit. German retail sales are out as is Italian PPI and UK lending data. A few days before the ECB meeting, EU CPI is critical for markets. In the Americas, Canadian GDP is out along with the Chicago PMI and pending home sales and Dallas Fed manufacturing.

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