US Open Note – Dollar rebounds but US futures point down amid prevailing risk-off mood
- Stefanos Oikonomidis
Today’s trading session started off with a cautiously positive risk mood but that didn’t last for long as risk aversion kicked in, erasing gains in risky assets and boosting safe havens. That said, the US dollar is regaining traction despite retreating US Treasury yields, with the 10-year yield falling to its lowest levels in more than a month, amid increasing worries over slowing global economic growth and the possibility of an upcoming recession. Later in the day, investors and markets will be keeping a close eye on the FOMC minutes for clues about a potential 75 bps increase in June and the reduction of its balance sheet, alongside the Bank’s updated views on inflation and growth.
On the data front, US durable goods orders rose by 0.4% on a monthly basis in April, against the 0.6% expectations. Nevertheless, the greenback remained unchanged after the report.Euro slides on mixed signals
On the other hand, the euro is losing some ground today even though most ECB members are increasingly adopting a more hawkish rhetoric. Specifically, both ECB policymakers Knot and Rhen supported the view that a 50 basis point hike in July is feasible, while also mentioning that growth projections are expected to be revised lower next month due to the Ukrainian war and other negative global developments.
However, ECB Chief Economist Philip Lane sounded more dovish, suggesting that uncertainty related to the ongoing war OR due to the ongoing war and the inflation outlook requires a lot of flexibility on the Bank's part. Thus, the ECB is not anticipated to commit to a strict rate hike timeline, but will likely base any monetary policy decision after Q3 on the subsequent condition of the EU economy.RBNZ hikes aggressively but Kiwi fails to strengthen
Earlier in the day, the Reserve Bank of New Zealand increased its base interest rate by 50 basis point, with its policymakers stating that the bank is determined to slow down inflationary pressures and restrain aggregate demand. Despite the initial boost, the kiwi did not manage to hold onto its gains, heavily pressured by the stronger dollar.
In other news, the increasing risk aversion seems to be benefiting safe haven currencies with the Japanese yen and Swiss franc appreciating across the board today.US futures in negative area amid mounting macro headwinds
Wall Street is set to open lower today, extending yesterday’s decline as fears over a slowdown in growth and the lack of positive signs from the ongoing war seem to be driving investors away from risky assets. More specifically, e-mini futures for the Nasdaq, S&P 500 and Dow Jones are down in pre-market trade, currently losing 0.55%, 0.40% and 0.35% on the day, respectively.
In individual stock news, Nvidia reports its Q2 earnings today after Wall Street’s closing bell.Oil appreciates; gold fallsOil futures are trading higher on the day, benefiting from concerns over a tighter supply outlook and an uplift in demand after China’s exit from zero-Covid policies. Inversely, gold is on the retreat today, heavily pressured by the dollar’s rebound, while the pullback in US Treasury yields is capping its decline.
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.