Asian stocks retreated with U.S. equity-index futures while the dollar extended gains as the European Central Bank’s surprise asset-purchase plan underscored diverging economic outlooks before U.S jobs data.
The MSCI Asia Pacific Index dropped 0.5 percent by 12:20 p.m. in Tokyo, while Standard & Poor’s 500 Index futures slipped 0.2 percent. South Korea’s won fell 0.6 percent and the New Zealand dollar weakened to a six-month low. The Bloomberg Dollar Spot Index added 0.1 percent, set for its highest close since July 2013. The yen decreased to as low as 105.71 per dollar and the euro held near a 14-month low. Wheat and corn futures rebounded.
After data showed U.S. service industries grew at the fastest pace in nine years last month, payrolls reports today are expected to signal continued recovery as the Federal Reserve presses on with reductions to its asset purchases. European bonds rallied yesterday as the ECB unexpectedly cut key interest rates and announced a plan to buy privately owned securities, while the Bank of Japan maintained record stimulus. Ukraine’s President Petro Poroshenko voiced “careful optimism” that talks today with pro-Russian rebels will set the course for a cease-fire.
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AUD/USD could extend the recovery to 0.6500 and above
The enhanced risk appetite and the weakening of the Greenback enabled AUD/USD to build on the promising start to the week and trade closer to the key barrier at 0.6500 the figure ahead of key inflation figures in Australia.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold struggles around $2,325 despite broad US Dollar’s weakness
Gold reversed its direction and rose to the $2,320 area, erasing a large portion of its daily losses in the process. The benchmark 10-year US Treasury bond yield stays in the red below 4.6% following the weak US PMI data and supports XAU/USD.
Bitcoin price makes run for previous cycle highs as Morgan Stanley pushes BTC ETF exposure
Bitcoin (BTC) price strength continues to grow, three days after the fourth halving. Optimism continues to abound in the market as Bitcoiners envision a reclamation of previous cycle highs.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Federal Reserve might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.