Tech Stocks Push Higher into Weekend – Nasdaq up 0.44%
The Nasdaq hit another record close on Friday in a mixed day’s trading into the weekend, as investors continued to price in Fed rate cuts in the coming months. The Dow took a hit on the day, closing down 0.59% at 45,834; the S&P closed just 0.05% down at 6,584, while the Nasdaq added 0.44% to 22,141. US Treasury yields pulled back some of their recent declines, the 2-year up 1.4 basis points to 3.556% and the benchmark 10-year adding 4.4 basis points to 4.064%. The dollar remained steady against the majors, adding 0.09% to close at 97.62. Oil prices pushed higher after news of another Ukrainian drone strike on Russian oil facilities hit newswires, Brent up 0.93% to $66.99 and WTI up 0.51% to $62.69 a barrel, whilst gold also moved north on haven flows, up 0.24% on the day to $3,643.14 an ounce.
Central Banks in Focus This Week for FX Traders
The market is gearing up for some potentially big moves this week, with four major central banks due to make interest rate announcements in the next few days. Top of the list is the Federal Reserve Bank, which is well priced in to make a 25-basis-point cut on Wednesday; however, FX traders in particular are looking at some of its counterparts for better longer-term trading opportunities. The Bank of Canada is also expected to cut by 25 points earlier in the day on Wednesday, and we also have the Bank of England and the Bank of Japan set to make calls in the following days. Both are expected to keep rates steady; however, the forward guidance from all four banks is likely to provide interest rate differential trading opportunities, and this is where traders are expecting to see some strong moves in the coming days.
Busy Calendar Day to Kick Off the Trading Week
For a change on a Monday, there are a few scheduled events on the macroeconomic calendar today ahead of what is expected to be a lively week for financial markets. The Asian market may see liquidity slightly dampened by a Japanese bank holiday today, although traders are expecting to see moves during the session, especially midway through the day when some key Chinese data is released. Industrial Production (exp. +5.7% y/y) and Retail Sales (exp. +3.8% y/y) numbers are expected to dominate sentiment, with any significant deviations likely to trigger a strong reaction in local markets. There is little of note in the European session today, although we are set to hear from ECB President Christine Lagarde later in the day when she speaks from Paris, which could add some volatility to the euro. The New York session has just the Empire State Manufacturing Index data (exp. 4.3) due out; however, traders are expecting to see some market positioning ahead of the key Fed update later in the week.
