Despite a pronounced pullback in risk appetite overnight, the U.S. dollar Index is down, mostly dragged by losses against the Euro.
Overview
S&P 500 and Nasdaq futures are down 0.7%, continuing the negative momentum seen in European and Asian equities. Widespread protests have exploded around China as citizens are fed up with the nation’s strict Covid Zero policy. The protests seem to be much larger than previous demonstrations. Analysts have differing opinions on what it can mean for China’s reopening, the outlook for global growth, and the demand for energy. The domestic economic agenda is light today, with only the Dallas Fed Manufacturing Index due out at 10:30 a.m. The Fed’s Williams and Bullard are both set to speak today at noon. Looking ahead, markets will pay close attention to Fed President Jerome Powell’s speech on Wednesday afternoon. Most expect the Fed Chief to solidify the pivot to slower interest rate hikes in the future. The biggest risk event on this week’s calendar is Non-Farm payrolls on Friday. Economists expect the labor market added 200K jobs in November, down from 261K in October. The unemployment rate is expected to hold steady at 3.7%.er.
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What to Watch Today…
- The Fed’s Williams and Bullard at noon
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CAD ⇓
Commodity-based currencies are all on the defensive today as protests in China sap demand for the energy. WTI crude futures dropped nearly 3% to $74 a barrel. China is the world’s largest importer of crude. The Canadian dollar dropped 0.4%. The Aussie dollar fell as much as 1.3% before recouping some of its losses. China is Australia’s largest trading partner. NZD/USD is down half a percent.
JPY ⇑
The Japanese yen reclaimed the title of safe-haven of choice, at least for today. The yen rallied over one percent against the U.S. dollar as market participants around the world weigh the consequences of the protests in China. USD/JPY fell to the lowest since August 29th.
