Stocks Drift Ahead of Inflation Numbers – Dow down 0.4%
US stock indices drifted lower again in trading yesterday as investors locked in profits ahead of key inflation data on Friday. The Dow dropped 0.37% to 46,121, the S&P fell 0.28% to 6,637, and the Nasdaq fell 0.34% to 22,497. The dollar rallied strongly against most of the majors, with the DXY up 0.61% to 97.87 as yields pushed higher, the 2-year up 4.1 basis points to 3.604%, and the benchmark 10-year up 4 basis points to 4.147%. Oil prices jumped higher to hit 7-week highs after US inventory data came in much lower than expected and news of further Ukrainian strikes on Russian oil facilities hit the market, with Brent up 2.23% to $69.14 and WTI up 2.21% to $64.81. Gold fell off recent record levels in line with the stronger greenback, down 0.74% on the day to close at $3,736.16 an ounce.
Dollar Rallies to Key Levels Again on the Majors
The dollar rallied strongly in trading yesterday as traders continued to weigh comments from Fed Chair Jerome Powell that he is still focused on inflation numbers as well as jobs data ahead of tomorrow’s key PCE number. The dollar index rallied 0.6% on the day, and the dollar now sits at key levels against some of the world’s major currencies. Euro and Cable are both now trading just above key support lines, while USDJPY and USDCHF are very close to big resistance levels on the daily charts. There are still five trading sessions ahead of key inflation numbers in the US tomorrow, but there is a strong chance that these levels could break before the data release and we see a further rally in the greenback. If that is backed up by a stronger-than-expected PCE number, then we should see fresh ranges for the majors into next week.
Traders Prepare for Another Busy Day Ahead
It looks like being another busy trading day ahead for markets as traders eye pending key inflation data from the US tomorrow and react to a fairly lively last day. Asian markets are set to open mixed after indices slipped on Wall Street overnight, and there is little on the calendar to change momentum in the first session of the day. Things should liven up once the London session kicks off, with a big focus on Swiss markets early in the day when the Swiss National Bank makes its latest interest rate call. They are expected to keep rates on hold, but traders are anticipating volatility in the franc on any forward guidance, with rates especially vulnerable while sitting at 0%. The New York session sees a big US data drop early in the day with Final GDP (exp. 3.3% q/q), Weekly Unemployment Claims (exp. 233k), and Durable Goods (exp. -0.3% m/m) all out at the same time. Existing Home Sales (exp. 3.96m) data is also out later in the session, and we hear from a barrage of Fed members including Schmid, Williams, Bowman, Barr, Logan, and Daly. However, expect investors to maintain a wary eye on tomorrow’s PCE number throughout the session.
