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S&P500 Futures fade bounce off one-month low, yields dribble amid mixed central bank signals, light calendar

  • Market sentiment remains sluggish, fades the previous risk-on mood ahead of second-tier China, US data.
  • S&P500 Futures prints mild losses after bouncing off one-month low to snap four-day losing streak the previous day.
  • US Treasury bond yields struggle for clear directions after reversing Friday’s weakness the previous day.
  • Mixed signals from Fed, BoJ and BoE join concerns about Eurozone recession to weigh on risk profile amid lackluster trading.

The risk appetite fails to extend the week-start cautious optimism as market players await the second-tier statistics from China and the US on early Tuesday. In doing so, the traders also struggle amid mixed signals from the major central bankers, especially amid a lack of major data/events before Thursday’s US inflation.

While portraying the mood, S&P500 Futures prints mild losses around 4,530 as it retreats towards the monthly low marked the last Friday, reversing the first daily gain in five marked on Monday. That said, the US 10-year and two-year Treasury bond yields remain pressured around 4.06% and 4.76% by the press time. It’s worth noting that Wall Street closed with the first daily positive in five by the end of Monday’s North American session.

With this, the US Dollar Index (DXY) manages to extend the week-start rebound above 102.00 while the prices of Gold and Crude Oil remain weak for the second consecutive day, down 0.20% and 0.50% to around $1,932 and $81.70 respectively at the latest.

On Monday, mixed statements from the Federal Reserve (Fed) and the Bank of England (BoE) officials joined the unclear concerns about the Bank of Japan (BoJ) and the European Central Bank (ECB) allowed bears to take a breather, especially amid China stimulus hopes.

That said, Fed Governor Michelle Bowman said that additional rate increases will likely be needed to lower inflation back to target. On the contrary, New York Fed President John C. Williams said he expects that interest rates could begin to come down next year. Fed’s Williams also conveyed hopes of witnessing a slightly higher unemployment rate as the economy cooled.

Elsewhere, the chatters about the European Central Bank (ECB) peak rates were triggered by the global rating agency Fitch Ratings and weighed on the Euro afterward as it said on Friday that the falling Eurozone inflation puts the ECB rates peak within sight. On the same line was the ECB article which stated that the “underlying inflation likely peaked in the first half of 2023.”

Furthermore, the Bank of Japan’s (BoJ) Summary of Opinions for the July meeting defended BoJ doves despite the market’s concerns of a sooner end to the ultra-easy monetary policy in Japan. Additionally, Bank of England (BoE) Chief Economist Huw Pill cited the two side risks for the UK inflation.

Looking ahead, trade numbers from China and the US will entertain the market players for the day but Wednesday’s China Consumer Price Index (CPI) and Thursday’s US CPI are the key for the traders to watch for a clear guide.

The risk appetite fails to extend the week-start cautious optimism as market players await the second-tier statistics from China and the US on early Tuesday. In doing so, the traders also struggle amid mixed signals from the major central bankers, especially amid a lack of major data/events before Thursday’s US inflation.

While portraying the mood, S&P500 Futures prints mild losses around 4,530 as it retreats towards the monthly low marked the last Friday, reversing the first daily gain in five marked on Monday. That said, the US 10-year and two-year Treasury bond yields remain pressured around 4.06% and 4.76% by the press time. It’s worth noting that Wall Street closed with the first daily positive in five by the end of Monday’s North American session.

With this, the US Dollar Index (DXY) manages to extend the week-start rebound above 102.00 while the prices of Gold and Crude Oil remain weak for the second consecutive day, down 0.20% and 0.50% to around $1,932 and $81.70 respectively at the latest.

On Monday, mixed statements from the Federal Reserve (Fed) and the Bank of England (BoE) officials joined the unclear concerns about the Bank of Japan (BoJ) and the European Central Bank (ECB) allowing bears to take a breather, especially amid China stimulus hopes.

That said, Fed Governor Michelle Bowman said that additional rate increases will likely be needed to lower inflation back to target. On the contrary, New York Fed President John C. Williams said he expects that interest rates could begin to come down next year. Fed’s Williams also conveyed hopes of witnessing a slightly higher unemployment rate as the economy cooled.

Elsewhere, the chatters about the European Central Bank (ECB) peak rates were triggered by the global rating agency Fitch Ratings and weighed on the Euro afterward as it said on Friday that the falling Eurozone inflation puts the ECB rates peak within sight. On the same line was the ECB article which stated that the “underlying inflation likely peaked in the first half of 2023.”

Furthermore, the Bank of Japan’s (BoJ) Summary of Opinions for the July meeting defended BoJ doves despite the market’s concerns about a sooner end to the ultra-easy monetary policy in Japan. Additionally, Bank of England (BoE) Chief Economist Huw Pill cited the two side risks for UK inflation.

Looking ahead, trade numbers from China and the US will entertain the market players for the day but Wednesday’s China Consumer Price Index (CPI) and Thursday’s US CPI are the key for the traders to watch for a clear guide.

Also read: Forex Today: A slow start to the week for currencie

Author

Anil Panchal

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.

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