Strong US Data Pushes Markets to Record Highs Again – Dow up 0.7%
Another set of strong numbers in the US helped to push stock indices to fresh record highs yet again yesterday. The S&P hit its 20th record high this year as it gained another 0.32% on the day, the Dow and Nasdaq also registered record levels, adding 0.68% and 0.20% respectively. FX markets saw increased volatility again as the dollar initially continued its post-Fed decline before rallying strongly later in the day on the back of stronger US numbers and other central bank updates. US treasury yields gained on the day, the 2-year adding 3.2 basis points to move up to 4.636% and the 10-year grinding up to 4.272%. Oil prices drifted slightly lower, but probably the standout move on the day came in Gold which touched a new record high again at $2,222.39 before dropping back down to finish close to yesterday’s open.
Dollar Swiftly Back in Favour with FX Traders
The dollar swiftly reversed its post-Fed losses in trading yesterday as strong data prints confirmed a resilient US economy. The Philly Fed Manufacturing Index, Flash PMI, Existing Home Sales, and the weekly unemployment claims numbers all came in better than expected to push the dollar higher just a day after a more dovish FOMC led to strong losses for the greenback. Earlier in the day, a shock cut from the Swiss National Bank and a more dovish outlook from the Bank of England helped to push their respective currencies lower against the dollar aiding its initial move back up, but it was the local data that really pushed the move. Traders will continue to monitor data closely after Wednesday’s Fed meeting conclusion and FX markets can be relied upon to be first out of the blocks to push markets to where they should be based on the data rather than central bank rhetoric.
Another Busy Trading Day Ahead to Close out the Week
Traders are expecting more volatility ahead in the final few sessions of what has already been a hectic week for markets. Asian investors will get a bit of relief on Friday with nothing major on the calendar in the day’s first trading session. But early in the European day, the focus will be back on the UK, which saw big market moves yesterday post the BOE rate call, as the latest Retail Sales numbers are released. Canadian Retail Sales data is also due out early in the North American session, but we are likely to see more action south of the border later in the day as we hear from Fed Chair Jerome Powell when he speaks at a Fed event in Washington DC. FOMC members Michael Barr and Raphael Bostic are also scheduled to speak later in the day, although expect the Chair’s comments to dominate market moves.
