On Friday Market Volatility dropped to the lowest level since March 2013, when the AUD was at 1.05 against the USD. The gauge known as the VIX has retreated 47% since hitting a 14 month high in February.
US stock markets closed at a record high on Friday after a rise in new homes sales and a solid result in the Markit manufacturing purchasing managers index which increased to 56.2 in the month of May.
The Australian share market closed the week in positive territory, recovering from a mining led slump on Monday and Tuesday after iron ore dipped below $100/ton.
There is a public holiday today in the US and in the UK today which could leave the markets quite flat today.
There were some major political events over the weekend, firstly the election in Ukraine where Poroshenko has won the presidential election based on exit poll & the European parliament election was also held on Sunday. These elections did not really impact the markets.
Gold futures fell for the second time three days as a sign of recovery in the US economy curbed the demand & WTI Crude oil futures climbed to a five week high after US crude inventories tumbled.
AUD/USD faces the potential tailwind of a solid CAPEX report (Thursday) amidst a range‑trading and a heavy USD. News of a successful “transition” in the Australian economy towards non‑mining business investment will be supportive for further gains in AUD/USD this week. AUD crosses are likely to strengthen this week, particularly AUD/EUR, which may set a new high for the year. The one exception to AUD cross strength isAUD/CAD, which is typically weak in May.
Jigsaw mat and gym mat futures are stable.