Dovish Powell Propels Stocks Higher – Nasdaq up another 1.5%
It was service as usual for US investors yesterday as they took the major indices to record highs yet again. Jerome Powell was more dovish in his comments yesterday than on Wednesday as he advised that rate cuts will “likely be appropriate” this year. The Dow gained 0.34%, the S&P jumped 1.03% and the Nasdaq powered 1.51% higher. The dollar took a hit against all of the majors, with the UsdJpy notably losing nearly 1% on the day, the Euro moved higher despite the ECB holding steady on rates. US treasury yields dropped off, although were more resilient that the greenback, the 2-year losing 5 basis points to 4.514% and the 10-year dropping just 1 basis point to 4.092%. Oil prices were flat on the day, Brent finishing at $82.99 and WTI at $78.93 per barrel. Gold hit fresh highs again before pulling back slightly, closing up 0.46% at $2,161 per ounce.
Dollar Under Pressure After Dovish Fed Comments
Currency volatility has started to pick up in the last few days with major FX pairs seeing strong moves as the dollar has taken a hit on a more dovish Fed outlook. The Euro gained 0.45% in trading yesterday, the Cable 0.58% and the standout was the Jpy which saw the UsdJpy drop 0.92%. The stars appear to be aligning for Jpy bulls on an interest rate differential front as the Bank of Japan moves closer to tightening and the Fed to an easing bias. Traders are now expecting to have a bit of a break in trading today ahead of the key non-Farm Payrolls data, but if we see proof that the jobs market is easing in the US and earnings are pulling back, then these moves could just be the tip of the iceberg, especially when it comes to the UsdJpy outlook.
Traders Eye Non-Farm Payrolls Ahead
It has been a volatile and positive week so far for investors and the final day’s trading looks set to be another busy one. Traders do get a chance to have a bit of a breather in the first two sessions of the day but are expecting more volatility once the North American session gets going. It is all about the non-Farm payrolls data today and given comments from the Fed Chair yesterday, anything showing a slowing in the jobs markets will give the green light for more gains in the stock market and further downside for the greenback. Canadian dollar traders will have the double headache of having to digest employment data on both sides of the equation at the same time. Investors will also note that Chinese CPI and PPI numbers are set to come out over the weekend which can lead to some gapping on the Monday open.
