After seesawing overnight, the U.S. dollar is down modestly against most of its major rivals to start the week.
Overview
Global equities are trading in a mixed direction, with a steep rally in Chinese stocks but slight declines in Europe and American futures.
Markets are still trying to absorb Friday’s Non-farm payroll beat. While the number of jobs added was higher than expected, the possibly more important number was wage growth which continues to improve. While good for individuals, it potentially makes things difficult for the Federal Reserve, which is hoping to temper its future interest rate hikes.
Today’s data includes US Services and Composite PMI at 9:45 a.m., followed by factory orders and durable goods orders at 10 a.m.
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What to Watch Today…
- Service and Composite PMIs at 9:45 a.m.
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EUR ⇑
The Euro ticked a touch higher against the U.S. dollar. The Euro has rallied over 5.5% versus the greenback over the last thirty days.
We are ten days out from the European Central Bank’s next interest rate decision. A 50-basis point hike is fully priced in. Futures show just a 17% chance the ECB could surprise to the upside with a 75-basis point hike. ECB Governing Council member Gabriel Makhlouf helped solidify the expectation of a half-a percent hike over the weekend, saying 50 basis points “is about where we’ll end up.”
AUD ⇑
Commodity-based currencies were among the biggest winners overnight but have since given back some of their gains. Commodity prices from oil to iron ore to copper all climbed on the prospect of more demand from China after the country announced easing Covid restrictions.
The Aussie dollar rose nearly a percent at its strongest point overnight, touching levels last seen in September. The Reserve Bank of Australia will make its interest rate decision overnight.
