Another day and another strong data print out of the US, although this time good news for investors as the US stock indices close nicely in the black. The S&P and Nasdaq both finishing the day up around 0.75% with the Dow beating both closing 1% up. The US dollar surged north in line with US treasury yields and the market continues to focus closely on this month’s Fed meeting with some even suggesting we may see 50bps from the FOMC.
There has been some volatility in the market over the last few weeks but the one consistent theme has been strong data prints out of the US and an increasing expectation for higher rates for longer stateside. US treasury yields have moved firmly to the topside and the benchmark 10 year is now trading above 4% with the closely watched 2 year trading at 15 year highs approaching the 5% level. Some currency traders feel that the major pairs are lagging slightly and are looking for some bigger moves in the next couple of weeks, especially if this current pattern in economic indicators remains and it’s starting to push next week’s key Non-Farm Payrolls number even further up the pole in terms of importance.
Looking ahead at the final trading sessions of the week and it’s a relatively light day in terms of economic data releases. The Asia session is very quiet and there are a raft of European Services PMI numbers out at the start of the London day, however most traders will have the eyes firmly fixed on the US ISM Services PMI release at the start of the New York session. Market expectation is for a 54.5 result and anything far from expectation could see some volatile moves especially as it comes in the less liquid end of week session.
