US Dollar is under pressure following an upbeat ISM report on Wednesday and good job data .
The US Dollar (USD) is soaring through the markets as a clear rate divergence emerges. Separating the Atlantic Ocean in two, with Western and Central Europe depreciating as local rates fall. While the steady for longer is driving US yields higher, fueling the Greenback’s advance even more. The S&P 500 has broken below the 55-day Simple Moving Average (SMA). And the volatility index (VIX) has taken another dip. pushing up. Analysts are increasing the rate divergence trade, in which US rates will remain elevated for longer. And Europe, the United Kingdom, and Central European countries will have to cut faster. And more aggressively to avoid a crashing economy.
The macroeconomic data due out this Thursday confirms the preceding assertion. With nonfarm payrolls rising 3.5% from 3.7% previously when 3.4% was projected. The initial jobless claims figure, which fell from 228k to 216k when an increase to 324k was projected, adds fuel to the fire. Markets will be watching to see what five different US Federal Reserve officials have to say. on the current market conditions.
Daily digest: The US Dollar is the place to be in the US and the EU are negotiating a tariff agreement on excess Chinese steel.
As though the United States exists in its own universe. Another set of data confirms the US’s good economic health, with a soft landing seeming more likely by the day. The number of initial jobless claims fell from 228k to 216k at 12:30 GMT. Continuing Claims decreased from 1,725k to 1,679k. An revolt was predicted on both counts. Add to that the steady increase in Nonfarm Productivity for Q2 from 3.7% to 3.5%, topping the 3.4% projection, and the US appears to be on track to once again outpace Europe and other economies.
A large batch speaker from the US Federal Reserve: At 14:00 GMT, Philadelphia’s Patrick Harkers will take the lead. At 15:45 GMT, Chicago Fed member Austan Gooldsbee will talk. John Williams from New York and Raphael Bostic from Atlanta will speak at 19:30 GMT. Michelle Bowman will make the last statements from Fed members on Thursday at 20:55 GMT.
Asia’s equities are taking over the bearish attitude in which the US closed on Wednesday: The Hang Seng Index fell more than 1% after the market closed on Thursday. Meanwhile, European equities are in the red, although losses are limited.
According to the CME Group Fed Watch Tool, markets are pricing in a 93% possibility that the Federal Reserve will leave interest rates unchanged. at its September meeting.
The benchmark 10-year US Treasury bond yield is 4.29% and is expected to rise further after the US Treasury released a large amount of debt paper on Tuesday. The auctions swamped the markets with supplies, causing yields to rise.
