- Market sentiment remains pressured, the US dollar gains upside momentum.
- Yields portray three-day downtrend, S&P 500 Futures differ from Wall Street.
- Flash readings of S&P Global PMIs for July will be important ahead of next week’s FOMC.
Market sentiment remains sluggish during early Friday, as traders take a breather after the European Central Bank (ECB)-impressed volatility. The market’s latest inaction could also be linked to the lack of major data/events, as well as the market’s wait for flash readings of S&P Global PMIs for July for the key economies like the US, the UK, Germany and the Eurozone.
Amid these plays, the US Dollar Index (DXY) picks up bids to refresh its intraday high around 106.80, up 0.22% on a day, as risk-aversion returns to the table. That said, Wall Street benchmarks closed firmer and the US Treasury 10-year Treasury yields marked the biggest daily slump in five weeks, down one basis point (bps) to 2.90% at the latest. That said, S&P 500 Futures drops 0.45% by the press time.
The latest weakness in the market’s sentiment emanates from the recheck of the optimism following the ECB’s verdict, as well as the pre-established fears of recession and covid. Also underpinning the US dollar’s safe-haven demand is the next week’s Federal Open Market Committee (FOMC).
A slump in the US Treasury yields, due to the European Central Bank’s (ECB) higher-than-expected 50 basis points (bps) rate hike, drowned the US dollar the previous day. On the same line was the announcement of a new tool called the Transmission Protection Instrument (TPI) to tame disorderly market dynamics in the bloc.
It’s worth observing that anticipated weakness in the US PMIs and likely weakness in the UK and the eurozone activity data for July are also likely to help market sentiment in the short-term, which in turn could exert downside pressure on the US dollar and favor equities, gold and Antipodeans.
Alternatively, recession fears remain on the table and the Fed policymakers are bracing for faster rate hikes, especially after the latest ECB, which in turn can keep the risk appetite weaker moving on.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD attracts some buyers above 0.6570 following the Australian GDP data
The AUD/USD pair climbs to 0.6575 during the early Asian trading hours on Wednesday. The pair edges higher following the Australian growth numbers. However, the rebound of the US Dollar and risk-off mood might cap the further upside of AUD/USD.
EUR/USD extends the decline below 1.0800, Eurozone Retail Sales eyed
The EUR/USD pair remains under selling pressure below the 1.0800 psychological mark during the early Asian session on Wednesday. The upbeat Eurozone PMI data for November failed to inspire the Euro amid the persistently weak demand in the Eurozone.
Gold drops to $2,020, eyes on US ADP data
Gold loses momentum during the early Asian session on Wednesday. The renewed US Dollar demand drag the yellow metal lower. Meanwhile, the US Dollar Index rebounds to 104.00. The XAU/USD price trades near $2020, up 0.01% for the day.
Bitcoin-based meme coin ORDI price action wobbles after 1,100% rally
The Bitcoin-based BRC-20 meme coin, which had people confused as being an actual valuable token, is now slowly creeping up to that status. ORDI price rise over the past couple of days has been astonishing, and with BTC driving the price and crossing $44,000, ORDI is also gaining rapidly. But not for long.
Hot service sector might be cold water on swift rate cut hopes
Not only is the services sector still expanding, it picked up steam in November with the ISM coming in at 52.7. With prices still firmly in expansion and employment rising slightly, it suggests that recent expectations for rate cuts might have been pulled too far forward.