US Stocks Push Higher on Earnings – Nasdaq up 0.6%
US stock indices pushed higher again in trading yesterday after major banks once again reported stronger earnings data, and investors shrugged off concerns about the continuing US shutdown and trade deals. The Dow did slip on the day, down 0.04% to 46,253; however, the S&P and Nasdaq both pushed higher, the S&P up 0.40% to 6,671 and the Nasdaq gaining 0.66% to 22,670. The dollar drifted lower, the DXY losing 0.24% to 99.03, while Treasury yields finished close to flat — the 2-year up 1.7 basis points to 3.497% and the 10-year down just 0.4 of a basis point to 4.028%. Oil prices were mixed, Brent up 0.10% to $62.45, while WTI dropped 0.73% to $58.27 a barrel. Gold, however, continued to drive higher, hitting another fresh record at $4,217.95 before closing up 1.55% at $4,207.48 an ounce.
Dollar Bulls Back in Play
The dollar experienced its best week in two months last week and still remains relatively well bid against most of the majors, with the exception of the yen, which has been playing its own game as Japanese political updates continue to hit the market. The dollar index is still hovering above 99, but traders feel that we could see further moves in the next few days, which could push the dollar into fresh ranges against the majors. Undoubtedly, the return of US data would help, and any positive numbers—especially on the jobs front—would see the dollar appreciate as Fed rate-cut expectations fall.
Earnings numbers for US banks have been positive over the last couple of days, and as one of the only indicators we have on the US economy at the moment, some investors feel these updates are dollar-positive. For now, though, traders are following the recent trend and looking to buy dollars on dips, but expect bigger moves once we have the return of data, with, as usual, a big focus on jobs and inflation numbers.
Busy Day Ahead on the Economic Calendar
It is probably the busiest day of the week on the macroeconomic calendar today, with some key data due out across the sessions and more central banker updates due later in the day. The initial focus in the Asian session will be on Australian markets, with the crucial jobs numbers due out early in the session. The market is expected to see an increase of 20k jobs last month and for the unemployment rate to creep up to 4.3%, but there is plenty of debate as to whether we will see these prints, and traders are expecting volatility around the event.
There is a big data drop out of the UK early in the European session, with the GDP data (exp. +0.1% m/m) the pick of the bunch, and once again, moves in the pound are expected around the event. The New York session does see some US data released despite the ongoing government shutdown, with the Philly Fed Manufacturing Index (exp. 8.6) and the Weekly Crude Oil Inventory (exp. +0.3mio) both due out. We also hear from a plethora of Fed and MPC members again, as well as ECB President Christine Lagarde and Bank of Canada Governor Tiff Macklem during the session.
