S&P 500: Futures stay mildly bid amid US dollar weakness, risk reset

S&P 500 Futures defies Friday’s halt to a four-day winning streak.
US dollar remains on the back foot amid rising virus numbers, fears of escalating US-China tension.
US data, American traders’ return and the qualitative catalysts will be in the spotlight.

Anil Panchal FXStreet

S&P 500 Futures print 0.60% gains while taking the bids to 3,147 during the initial hour of Tokyo open on Monday. The risk barometer shrugs off the coronavirus (COVID-19) updates from the US, as well as fears of escalating Sino-American tension, to kick-start the week on a positive note. In doing so, the equity derivative might be taking clues from the US dollar weakness and US President Donald Trump’s efforts to placate the bears.

Pandemic details from the world’s largest economy continue to disappoint global traders. The latest updates from Reuters suggest the cases of the deadly disease stayed above 50,000 per day, the record high, during the initial four days of July. It should also be noted that the epicenter Florida and Texas have halted economic reopening plans amid a worrisome increase in the hospitalization rates. Also, US aircrafts are heading to the controversial South China Sea for exercising amid Beijing’s drill, which in turn raises fears of further tension between the world’s top two economies. Even so, US President Donald Trump tweets that the latest surge in the pandemic figures is because of the high testing.

Also standing on the negative side is the signal from the White House about a few more punitive measures for China despite President Trump’s absence of ‘OK’ on the sanctions concerning the Hong Kong issue. Furthermore, the New Delhi-Beijing tension could also be considered as a risk-negative catalyst.

Talking about the positives, the traders are likely preparing for the US players’ return after Friday holiday. The reason being Thursday’s upbeat employment data couldn’t get enough celebration.

In addition to S&P 500 Futures, the US 10-year treasury yields and Japan’s Nikkei also flash mild gains as we write. This suggests the traders are more interested in cheering the good news to worry about the prevailed tension.

As a result, today’s US market open and the ISM Non-Manufacturing PMI will be the keys to follow. Should the services gauge surge beyond 50 mark, expected 49.5 versus 45.4 prior, traders will have an extra reason to portray the risk-on mood.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

EUR/USD onsolidates around mid-1.1800s as traders keenly await FOMC Minutes

The EUR/USD pair struggles to capitalize on the previous day's goodish rebound from the 1.1800 neighborhood, or a one-and-a-half-week low, and consolidates in a narrow band during the Asian session on Wednesday. Spot prices currently trade just below mid-1.1800s, nearly unchanged for the day.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold bounces back toward $4,900, looks to FOMC Minutes

Gold is attempting a bounce from the $4,850 level, having touched a one-week low on Tuesday. Signs of progress in US–Iran talks dented demand for the traditional safe-haven bullion, weighing on Gold in early trades. However, rising bets for more Fed rate cuts keep the US Dollar bulls on the defensive and act as a tailwind for the non-yielding yellow metal. Traders now seem reluctant ahead of the FOMC Minutes, which would offer cues about the Fed's rate-cut path and provide some meaningful impetus.

DeFi could lift crypto market from current bear phase: Bitwise

Bitwise Chief Investment Officer Matt Hougan hinted that the decentralized finance sector could lead the crypto market out of the current bear phase, citing Aave Labs’ latest community proposal as a potential signal of good things to come.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.