- Markets expect a dovish hike from the FOMC on June 14
- GBP waiting for shape of Brexit stance; noise points to softer Brexit
- USDCAD heavy after strong Canadian jobs report
- Friday's selloff of US tech shares spread to Asian markets Monday
- Friday Nasdaq price action was a 'slow-moving train wreck': Garnry
- Macron's strengthened position is net positive for equities: Garnry
- Gold forming a double top, with long positions unwound ahead of FOMC: Hansen
- Gold finding support at $1,264/oz, but risk is towards $1,245 ahead of FOMC
- Brent finding support at $47.30/b, but needs break above $50 to energise bulls
By John Acher
Financial markets widely expect a dovish interest-rate increase from the Fed on Wednesday, and the Tories' loss of their parliamentary majority in the UK boosts the chances of a "soft Brexit", which could stoke a sterling rally, says Saxo Bank's FX strategy chief John Hardy.
The Federal Open Market Committee begins its two-day meeting on Tuesday, and is scheduled to make its announcement on Wednesday at 1800 GMT.
After the British Conservative Party's humiliating defeat in the June 8 parliamentary election, which deprived prime minister Theresa May of a majority, FX markets are waiting to see how the government's position on Britain's withdrawal from the European Union takes shape.
Hardy says that could set sterling up for a rally, as chances of a "soft Brexit" have increased with the election outcome.
A brutal selloff in US tech stocks knocked 1.8% off the Nasdaq on Friday, with heavy selling in the likes of FANG (Facebook, Amazon, Netflix and Google) stocks, though the index ended off lows for the day.
NASDAQ 100 breakdown — "a slow-moving train wreck"
Source: Saxo Bank
"The price action was a slow-moving train wreck, and then a dip when liquidity disappeared, and then a rebound — it was an awful session," says Saxo Bank's head of equities strategy Peter Garnry. "I think it was just a bad excuse to have a selloff."
But Garnry says that US tech stocks remain a good place to be invested if the correction is minor.
Macron wins again
Some news reports said Macron's bloc could be headed for such a large majority that it could be dangerous for French democracy,
but the voter turnout was dismally low — the lowest since 1848 — in a sign that people in France and Europe are fed up with politics.
"I think that is net positive for equities in Europe," Garnry says of Macron's victory. "The turnout was a disaster, but that speaks to politics in Europe in recent years."
The US tech selloff spilled over into Asian shares on Monday, says Saxo's Andrew Bresler in Singapore.
In the commodities markets, gold has formed a double top at $1,296/oz, with some long positions being unwound ahead of the FOMC, says Saxo Bank's commodities strategy chief Ole Hansen.
Crude oil is looking for support before potential EIA revisions to last week's strong build-up of oil inventories. Brent is finding support at $47.30/barrel, but it needs a break above $50/b to counteract the current negative sentiment, Hansen says.
From strength to more strength. France's president Emmanuel Macron's bloc won an impressive victory in the first round of legislative elections at the weekend. Photo: Shutterstock