US Tech Stocks Power Higher – Nasdaq up 1.25%
US tech indices powered higher in trading yesterday as Nvidia powered back after the last few days losses, the chipmaker gained nearly 7% on the day dragging both the S&P and the Nasdaq higher, the closed up 0.39% and up 1.26% respectively. The Dow however, experienced a poor day, dropping 0.76% to trade back towards the 39,000 level. US Treasury yields were quiet again as traders look ahead to Friday’s inflation number, the 2-year up just 0.4 basis points to 4.738% and the 10-year dropping 0.8 basis points to 4.240%. The dollar gained on the day, as further hawkish Fed comments and Consumer Confidence data pushed it high on the index – UsdJpy, traded a tight range under the 160 level. Oil prices dipped on the stronger dollar, Brent off 1.2% to trade to $85.01 a barrel and WTI down 1% to $80.83. Gold also fell off, losing 0.6% to close out the session around $2,318 an ounce.
Yen Remains in Focus for FX Traders
The Yen remains firmly in focus for FX traders over the next several sessions as it continues to flirt with record levels both against the dollar and on the crosses. The threat of intervention is still strong and will remain so over the next couple of days. For the UsdJpy the real main driver of its next sustained move is actually much more likely to be the PCE data print out of the US on Friday than any impact that the Japanese authorities will have buy throwing billions of dollars at the market. Most traders acknowledge that although intervention could push the Yen to much stronger levels across the board in a swift amount of time, the long-term impact really needs to see a change of the underlying fundamentals. Fortunately – or perhaps unfortunately – for the Bank of Japan, that opportunity will come on Friday where they will be hoping a lower print in the PCE data leads to a dollar sell off across the board and especially against the Yen – either way expect to see plenty of volatility in the pair in that last trading session of the week as it is unlikely to sit around current levels after the data release.
Quiet Calendar Day Ahead for Traders
The economic calendar is very subdued for the day ahead with traders expecting to see more rangebound conditions and smoother trading conditions. There is the potential for volatility however when Australian CPI data is released early in the trading day, or if the Yen starts to move towards that key 160 level against the dollar. Australian CPI is expected to show a year-on-year change of 3.8% and Aussie dollar traders are expecting plenty of volatility around the event, with the RBA now expected to be last the G10 cab off the rank in terms of rate cuts. There is little else out on the data calendar until we hit the US session when New Home Sales hits the market, although most are expecting that impact to be limited with investor focus already shifting towards the key PCE number on Friday.
