Stock Markets Under Pressure to Kick off the Week – Nasdaq Off 1%
US markets closed last week on the back foot and Asian bourses are set to start the week off in the same vein. All three of the major US indices finished Friday well in the red, the Dow down 0.65%, the S&P 0.77% and the tech-heavy Nasdaq once again the bigger mover, down 1.01% at the end of trading. The dollar had another strong day with the DXY rising 0.47% as its haven aspect gave more appeal to traders, once again the UsdJpy was one of the stand-out trades, topping out just shy of 144.00. US treasury yields, however, dropped off again late in the day with the benchmark 10-year falling 6.2 basis points.
Dollar Climbs as Haven Flows Increase
The US dollar closed out the week back on the front foot as investors are starting to see a combination of poor data prints and resolutely hawkish central banks add to the market concern. Traders are nervous that the market has got a bit ahead of itself in terms of pricing in rate cuts in the second half of the year, especially from the Fed, and this has added to some strong flows into the dollar over the last few sessions, the Euro fell 0.57% on Friday and the pound dropped again despite the surprise rate hike from the Bank of England on Thursday. Looking ahead at this week, we see overall sentiment starting on the back foot which should see traders looking for levels to buy the dollar and we hear from a plethora of central bankers at the ECB conference in Sintra – if they reiterate more hawkish rhetoric, then traders are expecting to see the dollar’s recent weakness reverse swiftly.
Central Bankers and Data Ahead
It is set to be a quiet start to the week in terms of the macroeconomic calendar today, the Asian markets have little to change sentiment from the poor day on Wall St and traders are expecting risk trades to drop off. The European Open sees the first data hit of the week in the form of the German IFO number which although lacking the impact it used to have still can move the Euro, the expectation is for a 90.7 print. Later in the session, we hear from SNB Chair Thomas Jordan who speaks after another 25bps hike last week. The North American session is quiet in terms of data releases but we do hear from ECB President Lagarde as she opens the ECB forum in Sintra, Portugal.
