US Stocks Hit by Further Tariff Updates – Nasdaq Down 2.6%
US stock markets declined yesterday despite yet another reversal by President Trump on Canadian and Mexican tariffs. The Dow fell by 0.99%, the S&P 500 by 1.78%, while the Nasdaq led the downturn, dropping 2.61% on the day.
The dollar continued its recent plunge, reaching levels not seen since before the November election. The DXY ultimately closed 0.10% lower at 104.21. Treasury yields had a mixed session, with longer-dated yields rising while shorter-dated ones fell. The 2-year yield lost 4.6 basis points, dropping to 3.958%, while the benchmark 10-year yield closed flat at 4.278%.
Oil prices were volatile but ultimately ended the session close to flat, with Brent up 0.19% to $69.43 and WTI rising 0.08% to $66.36. Meanwhile, gold edged lower in a relatively tight range, losing 0.29% to close at $2,910.45.
Dollar in Focus Ahead of Non-Farm Payrolls
The dollar has suffered significant losses this week, with the DXY down more than 3.5% from Monday’s open to last night’s low, in what has largely been a one-way move. A major driver of this decline has been the euro, which has seen its strongest three-day rally in two years, supported by economic updates from Germany. Given that the euro makes up 57% of the DXY basket, its surge has significantly impacted the index.
Tonight’s Non-Farm Payrolls (NFP) report could prove pivotal in determining whether this sharp decline is merely a short-term correction following a realignment with US yields or whether further downside lies ahead for the greenback. If the jobs data indicate a slowdown in the US economy and reinforce expectations of interest rate cuts, the dollar’s slide could continue in the coming weeks. Conversely, a strong report could trigger a swift reversal of this week’s losses.
US Session in Focus for Traders Today
Today is shaping up to be a classic Non-Farm Payrolls trading day, with a few additional factors adding to the mix. The event calendar is relatively quiet during the first two trading sessions, with the only notable release being a speech from ECB President Christine Lagarde. However, the main focus will be on the US session.
At the New York open, attention will turn to the headline NFP print, which is expected to show an increase of 159,000 jobs last month. Alongside this, traders will be closely watching the Average Hourly Earnings data (expected to rise by 0.3% month-on-month) and the Unemployment Rate (expected at 4.0%). Any deviation from these forecasts is likely to trigger significant market moves.
Canadian employment data is also scheduled for release at the same time, but US figures are expected to drive overall market sentiment.
Adding another layer of potential volatility, several Federal Reserve officials, including Chair Jerome Powell, are scheduled to speak later in the day. In an unexpected addition, President Trump is also set to deliver remarks on cryptocurrency policy near the end of the session. With these events on the horizon, traders are bracing for heightened market volatility right through to the close.
