US Markets Rally After Jobs Report – Nasdaq up 0.8%
US employment data aligned closely with market expectations on Friday, boosting expectations of a Federal Reserve rate cut and driving stock markets higher. However, the rally was not universal, as the Dow Jones Industrial Average dipped 0.28%. Tech stocks surged, propelling the S&P 500 and Nasdaq Composite to new records, with the S&P rising 0.25% and the Nasdaq gaining 0.81%. Treasury yields fell to six-week lows, with the two-year yield dropping 4.8 basis points to 4.096% and the ten-year declining 2.9 basis points to 4.147%. Oil prices also fell amid persistent supply concerns, with Brent crude down 1.43% to $71.06 and WTI slipping 1.64% to $67.17. Gold experienced a choppy trading range around the employment data but ultimately closed up 0.3%, settling at $2,632.49.
Dollar in Focus Again This Week
The US dollar will remain a focal point for FX traders this week, with the final piece of the Federal Reserve’s current policy puzzle due on Wednesday. Crucial US Consumer Price Index (CPI) data will be released midweek, and a print in line with expectations is likely to solidify a 25-basis-point rate hike from the Fed next week. Current market pricing suggests an 85% probability of such a move; however, stronger-than-expected CPI figures could temper these bets and prompt the dollar to regain strength against major and emerging market currencies. The dollar index has steadied around the 106.00 mark in recent days, though traders anticipate potential upside driven by data and geopolitical developments, both domestic and international. While inflation data could trigger a short-term surge in the dollar, longer-term perspectives suggest that the policies of the incoming Trump administration in 2025 may play a more significant role in the currency’s upward trajectory.
Quiet Start to the Trading Week
The trading week begins quietly on the macroeconomic calendar, with activity expected to pick up in the coming days as key central bank rate decisions and economic data are released. Early attention will focus on Chinese markets, with the release of the latest CPI and PPI data from the world’s second-largest economy. The headline CPI figure is anticipated to show a 0.4% year-on-year increase, while PPI data is expected to indicate a 2.8% year-on-year decline. Beyond these reports, there is little else scheduled in the later trading sessions of the day. However, market participants anticipate movements across asset classes as geopolitical headlines continue to influence sentiment.
