US Markets Mixed into the Weekend – Dow down 0.65%
US markets closed mixed on Friday as investors continued to assess the likely timing of upcoming economic data releases and the implications for Federal Reserve rate-cut expectations. The Dow slipped 0.65% to 47,147, while the S&P 500 edged lower by 0.05% to 6,734, and the Nasdaq managed a modest gain of 0.13%, finishing at 22,900. The US dollar also firmed, with the DXY rising 0.13% to 99.27. US Treasury yields moved higher as well, with the 2-year yield climbing 1.5 bps to 3.606% and the 10-year yield rising 2.9 bps to 4.148%. In commodities, oil prices jumped sharply after a key Russian port suspended exports following a Ukrainian drone strike. Brent was up 2.19% to $64.39, while WTI gained 2.39% to $60.09. Gold, however, sold off heavily under renewed Fed hawkishness, dropping 2.09% to $4,084.06.
Dollar in Focus with Return of Data and Fed Rate Hopes
The US dollar increased in trading on Friday, with the DXY rising 0.13% to 99.27, reflecting a shift in rate sentiment as expectations for a December Fed cut continued to fade. The market has now flipped, with a hold looking more likely than a cut in December, as several Fed officials, including Chair Jerome Powell, have advised that inflation remains a concern. The futures market is now pricing in only a 41% chance of a 25-basis-point cut at the final meeting of the year, down from over 95% just a few weeks ago. The return of data this week, especially the Non-Farm Payrolls, will see more volatility for the dollar, and if those numbers start to show a bit of resilience for the jobs market, then traders expect chances of a rate cut falling further south and the dollar to appreciate.
More Volatility for Markets Ahead Today
With the US government now fully reopened and long-delayed data releases set to resume, traders are expecting increased volatility through the week. It’s a relatively quiet calendar day to start the week ahead for traders today; however, there is some data that could move local markets. The initial focus for the Asian session today will be on Japan, where preliminary GDP figures are due early in the day, with the market expecting the quarterly number to show a 0.6% decline. There is little on the cards in the European session to move the market, but later in the New York session, Canada releases its latest CPI data (exp +0.2% m/m and +3.1% median y/y), which should see some strong reactions in the loonie. The US Empire State Manufacturing Index (exp 6.1 vs prev 10.7) is also released at the same time; however, expect investor concerns on Fed moves to continue to dominate sentiment for the initial sessions of the week.
