US Stocks Consolidate as Tensions Ease – Nasdaq up 0.3%
US stock indices had a bit of a breather in trading yesterday as investors assessed easing tensions in the Middle East and Jerome Powell completed day 2 in front of Congress. The Dow pulled back 0.25%, the S&P lost just 0.02%, while the Nasdaq gained 0.31%. The dollar pulled back against the majors again, with the DXY off 0.24% at 97.70, close to annual lows, while US Treasury yields also dipped—the 2-year yield down 1.2 basis points to 3.781% and the 10-year yield down 0.4 of a basis point to 4.291%. Oil prices also experienced a relatively quieter day, bouncing off recent lows, with Brent up 0.73% to $67.72 and WTI up 0.87% to $64.92 a barrel. Gold also pushed off recent lows, up 0.24% on the day to close at $3,331.89 an ounce.
Dollar Under Pressure in Current Environment
The US dollar remains under pressure in the current market environment, with several of the key majors looking to break into fresh ranges again. The DXY is now trading at fresh lows for the year just under 97.50 after the Euro—which makes up 57% of the basket—broke to fresh highs overnight, and the pattern could repeat itself against some of the other majors, which will see the greenback established into fresh downside ranges. Cable has also broken to fresh annual highs today, whilst the Swiss Franc looks poised to do so in the next session or two. The antipodean currencies are also close to annual highs and could push higher today, whilst the JPY and the CAD are in mid-range. Traders will now be watching these currencies closely over the next couple of sessions, especially if these breaks can last over 24 hours on the daily charts, as they should confirm more downside potential for the greenback.
US Data in Focus Today
Markets will focus on US data later today whilst keeping a sharp eye on newswires for any geopolitical updates. There is little on the macroeconomic calendar in the Asian session today, and although there is no tier 1 data out in the European session, there will be a focus on UK markets with Bank of England Governor Andrew Bailey set to speak at the British Chamber of Commerce. We are due for some key updates out of the US once New York opens, with the Final GDP data probably the pick of the bunch. Expectations are for a -0.2% quarter-on-quarter decline, and anything off that will see moves across financial products. The weekly Unemployment Claims data is also due out (exp. 244K), alongside the latest Durable Goods numbers (exp. 8.6% m/m) and Core Durable Goods (exp. 0.1% m/m), and later in the day we have the Pending Home Sales data (exp. 0.2% m/m) to round out the calendar day.
