Global equities are experiencing a relief rally this morning, with indexes from Europe to Asia all in the green.
Overview
U.S. futures are also up for the first time since Friday when Jerome Powell’s speech sent risk appetite on a downward spiral. As a result, the U.S. dollar is weaker against most of its rivals, and the Bloomberg Dollar Spot Index is down 0.2%. U.S. consumer confidence will be released at 10 a.m. At the time of writing, the Fed’s Barkin is speaking in West Virginia but has not said anything that has moved markets. New York Fed President John Williams will speak at 11 a.m. We expect central bankers to back Powell’s hawkish positioning. Just yesterday, Minneapolis Fed President Neel Kashkari said, “people now understand the seriousness of our commitment to getting inflation back down to 2.0%.”
What to Watch Today…
- Consumer confidence at 10 a.m.
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EUR ⇑
EUR/USD bounced higher, but it was not due to positive European economic data. Indeed, European economic confidence dropped to its lowest level since the beginning of the pandemic. German inflation reached an all-time high causing traders to increase bets that the European Central Bank will take a more proactive approach during their meeting next week. The common currency is getting support as energy prices in Europe finally saw some relief. The European Union is set to intervene in the short term and is making progress in its gas storage filling goal.
AUD ⇑
Risk-on currencies such as the Australian dollar and Swedish krona are the biggest winners overnight. The Aussie gained as much as half a percent before giving back about half of those gains. The Aussie saw a minor boost after China’s central bank set a stronger-than-expected yuan fixing for the fifth consecutive day. The central bank is giving markets a clear sign they do not want an excessively weak currency.
