Dollar resurgence on the cards as US data outperforms Europe

US manufacturing and jobs data shows improvement, with outperformance over Europe and the potential for a risk-off move helping to lift the dollar.

Philly Fed manufacturing survey lifts dollar to three-week high

“The dollar index has broken to a three-week high today, with fears of a potential topping out in equities tallying up with signs of US outperformance over Europe. First inflation, then retail sales, and now we have seen improvement in the jobless claims and the Philly Fed manufacturing survey for the US. While a recession is widely anticipated, there are signs that European nations will suffer greater consequences as energy prices signal the potential for a greater contraction if the breakdown in relations with Russia remains in place. Unfortunately, European contraction looks set to come alongside sharp increases in rates, with the ECB’s Schnabel coming out in favour of another hefty interest rate rise despite recession risks.”

Energy stocks on the rise, as crude prices see respite from selling pressure

“Oil & gas stocks have enjoyed a welcome boost today, following a period of weakness in crude prices that took Brent into a fresh five-month low. Yesterday’s surprise 7.1 million barrel contraction in US inventories helped undermine the bearish breakdown taking shape for crude, lifting hopes that a tightening supply-demand dynamic will push prices upwards once again. However, with an economic slowdown seemingly a foregone conclusion for many of the world’s top crude consumers, it looks likely that this rebound will soon be sold into on the premise of lower demand.”