Daily Market Comment – Dollar roars higher, stocks muted amid Fed uncertainty, recession risks



  • Dollar stretches weekly gains, hits 1-month high, on Fed talk, dimming outlook
  • Wall Street headed for flat week as growth worries keep optimism in check
  • Gold and oil set to end week on the backfoot, but gas prices hold near highs

Markets look to Jackson Hole as Fed rate path gets blurred

Sentiment was subdued on Friday as investors struggled to get an accurate reading on the US economy as well as on the Fed’s intentions about the pace of monetary tightening. A flurry of housing data is clearly pointing to a slowdown in the sector, manufacturing activity seems to be diverging in different parts of the country, while there’s some signs that the recent cooling of the labour market is coming to an end.

Even the Fed appears to be having a hard time making sense of the data as policymakers are having doubts about what the pace of rate hikes should be going forward. The Fed’s arch hawk, James Bullard, is advocating another 75-bps increase in September but the San Francisco Fed’s Mary Daly is wary about overtightening.

Fed fund futures currently point to a slightly higher probability of a 50-bps hike in September than a 75-bps one. But those odds could change next week when Fed officials will gather in Jackson Hole, Wyoming, for their annual symposium where Chair Jerome Powell is set to give his first remarks since the July FOMC meeting and the first since the soft CPI report.

Dollar reclaims FX crown

But despite signs of a potential split emerging within the FOMC about how high rates should go and some visible cracks in the economy, a full-blown recession still seems some way off and policymakers’ resolve to contain inflation is indisputable.

This is why Treasury yields have been able to recover from their lows ploughed at the start of the month, giving the US dollar, which has been benefiting from renewed safety flows, an extra helping hand.

The dollar index is currently scaling fresh one-month highs and on track for weekly gains of almost 2%, crushing its rivals in the process.

Brutal losses for aussie and kiwi, euro and pound crushed too

The euro, marred by fears of energy shortages in the coming months, has slipped below $1.01 to one-month lows, while better-than-expected retail sales numbers out of the UK this morning have been unable to prop up the pound, which just breached the $1.19 level.

Investors remain deeply gloomy about the prospects for the UK and Eurozone economies as the steady surge in natural gas futures since June has taken European gas prices to record highs this week.

The worst performers of the week, however, have been the antipodean currencies, with both the aussie and kiwi headed for losses of more than 3%.

Worries about flagging growth in China and disappointment at policymakers’ response to the slowdown have been one of the main contributors to this week’s risk-off tone, weighing heavily on both the Australian and New Zealand dollars.

Stocks dodge a sharp selloff

But under the circumstances, equity markets have once again proved resilient to the negative headlines. The losses in Asia and Europe have been limited, while the S&P 500 is on track to finish the week flat, having hit a four-month top only on Tuesday.

A positive earnings guidance by Cisco Systems yesterday helped Wall Street close marginally higher, although e-mini futures are currently in the red.

Oil and gold back under pressure

In commodities, oil remains under pressure despite some support from a much bigger-than-expected drawdown in US crude inventories. The bleak economic outlook in Europe and doubts about the US and Chinese economies are keeping oil futures within their bearish channel even though there’s been no change to the tight supply picture.

Gold’s rebound, on the other hand, has faltered amid the dollar’s resurgence this week and the spike in bond yields. The precious metal briefly flirted with the $1,800/oz level last week but it has since retraced to around $1,750/oz.

Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.

Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.

Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.

Nous utilisons des cookies pour vous donner la meilleure expérience possible de notre site internet. En savoir plus ou modifier vos paramètres de cookies.

Avertissement sur les risques : votre capital est à risque. Les produits à effet de levier ne sont pas recommandés pour tous. Veuillez consulter notre Divulgation des risques