US Dollar Recovers As Markets Trim Bets for Future Rate Cuts
The US dollar strengthened against all of the major currencies as market participants spurred bets that yesterday’s 25bp rate cut would be the last of its series, and heighted bullish sentiment for the greenback amid negative economic data. As a result, the US dollar soaked in the biggest gains against the low yielding Swiss franc, with the Yen following behind as the pair traded in the 104.4 range. The high yielding commodity currencies lost ground against the greenback as commodity prices dipped lower, with the Canadian dollar taking the biggest beating of the three as it rose to 1.019. Against the European currencies, the US dollar regained its footing as it consolidated yesterday’s losses. As a result, the British Pound failed to hold up against the US dollar as it dropped to 1.974, while the euro continued to rack up losses at the pair dipped to 1.547.
The stock markets advanced as market participants cut bets for future rate cuts, with Symantec and Comcast adding to the mix as they announced a sharp rise in profits. As a result, the DJIA jumped a bolstering 189.87 points to 13,010.00 points, with 25 of the 30 components advancing. Among the broader indices, the S&P500 picked up 23.75 points to hold off at 1,409.34, with 551 stocks hitting a new 52 week high.
Demands for US Treasuries wavered as the stock markets advanced, and pushed many investors to leave the safe haven of risk free bonds as they chased after higher returns. As a result, the benchmark 10-Year yield rose to 3.769 percent from 3.738 percent, while the 2-Year yield jumped to 2.375 percent from 2.278 percent.
Looking ahead, the Non-Farm Payroll release will be the main event risk for the US session, and expect increased volatility in the currency markets as the index kicks off the morning at 12:30 GMT. The Average Hourly Earnings index will also be release at the same time, with the Factory Orders index ending the slew of fresh economic data at 14:00 GMT.