XM does not provide services to residents of the United States of America.

US Open Note – Stocks laid back as dollar flickers some life despite dip in yields



Risk appetite vanishes; inflation and taper talk jitters persist

Although the market outlook is largely optimistic, economies are emanating a lethargic vibe and seem to be searching for an assisting jolt to rekindle risk appetite. Investors may be looking aimlessly to the ECB and the Fed to provide markets with immediate booster jabs. Nonetheless, investors’ radars remain set around taper talks and price pressures and for sure the ECB’s and the Fed’s rhetoric around these issues will be cautious and gradually shifting to sustain the progress of the recovery.

Thursday’s scheduled ECB meeting and US CPI data seem to have nudged markets into hibernation, while faltering US 10-year yields, which slipped to 1.52% today, are also distorting the dollar strength-formula. Infrastructure bill delays are not helping market sentiment and US major indices remain largely muted, consolidating near their highs. The dollar index remains sluggish, holding a tad above the 90.00 level, while the broader FX climate remained fairly subdued too.

The euro, last quoted at $1.2185 and the sterling at $1.4155, are struggling to recapture their round numbers north of their location.

Gold has picked up from its intra-lows, however, appears to be slowly heading for the $1,900/oz mark, while silver is consolidating around the $27.70 level.  The USD/JPY pair peaked above the 109.50 mark but has surrendered its Asian gains, as dollar weakness persists.

EU and UK collide

In spite of a hampered dollar, the sterling is struggling to reclaim the $1.4200 level, dipping today due to persistent tensions with the EU around UK customs checks with Northern Ireland. This minor recoil in price was also duplicated in the euro despite stronger revised GDP data for the first quarter coming in at -0.3% q/q and -1.3% y/y. This however was overshadowed by weaker German ZEW Economic sentiment (79.8) for May not only missing the forecast of 86.0 but also the previous month’s figures of 84.4.

US and Canadian trade data and US Job openings

The US trade balance for April improved slightly to -68.9B versus the forecast of -69.00B, while robust Canadian trade figures for April hit 0.59B against the expected number of -0.70B. Nevertheless, the effect seems to have balanced out, keeping the pair USD/CAD still consolidating around the C$1.2100 mark. More points for the dollar come from the JOLTS data, where 9.29M job openings were registered in May, beating the estimate of 8.18M.

WTI futures are testing the $68.50 barrier after having deflected off the $70.00 per barrel mark but it seems negative pressures have yet to become dominant.

Scheduled at 17:00 GMT is the US 3-year note auction, while at 20:30 GMT, weekly crude oil stock data is expected.

Then at 23:30 GMT, RBA Assistant Governor Kent is speaking.

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.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.