Unlikely Aggressive Easing Upticks Dollar, Stock Futures Down

Unlikely Aggressive Easing Upticks Dollar, Stock Futures Down


Major US stock-Index futures remained fragile since the release of the US jobs report which lowered the chances of aggressive easing by the Federal Reserve. Since the latest Federal Open Market Committee meeting, the US stock market was finding strong support as investors believed that the Federal Reserve is going to take the needed steps to sustain the current economic expansion. SPX500, Dow Jones, and Nasdaq rallied to record highs ahead of the jobs report cheering the easing prospects. However, the latest economic data continued to prove that the US economy is still solid, weighing on the chances of aggressive easing (cutting rates by 50 basis points). On the other hand, the trade disputes between China and the United States remain a serious matter that affects investors' risk appetite. Despite the fact that both presidents agreed to resume trade talks, there is no progress yet. The Dow Jones Industrial Average futures dropped to 26668, the S&P500 futures tumbled to 2966, and the Nasdaq futures inched lower to 7751. Market participants will be looking forward to Chairman Powell semi-annual monetary policy testimony which starts tomorrow.


The dollar index which measures the greenback against a basket of major currencies rallied to a three-week high of 97.49 as the chances of aggressive rate cuts faded. The latest economic data are still signaling that the US economic outlook is strong and would give the Federal Reserve more time to asses before deciding on any easing measures. Currently, market participants are awaiting fresh fundamentals which could be derived from Powell's speech today in Boston, his semi-annual monetary policy testimony, FOMC meeting minutes, and the CPI figures. The US 10-year yields rose to 2.058%, slightly below Friday's high, the USDJPY edged higher to 108.85, and the EURUSD dived to $1.1205.


Precious metals prices drifted lower as the dollar firmed along with US Treasury yields. The price of a gold ounce tumbled to a low of $1391, the price of a silver ounce held steady near $15, and palladium dropped to $1555.


Oil prices are still trading in a tight range awaiting fresh fundamentals as OPEC+ failed to generate a significant impact on the oil market. Several fundamentals are affecting the oil market, among them the trade clash between China and the United States and its effect on the global economic outlook, central banks easing prospects, the geopolitical tensions, and the OPEC+ supply-cut deal extension. Any developments in any of the mentioned matters could trigger a move in prices. The West Texas Intermediate crude futures settled at $57.53, and Brent futures finished at $63.91. The American Petroleum Institute will release the weekly US crude oil stock later today where a significant change could generate market volatility.

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