US Markets Drift After Mixed Data – Nasdaq Down 0.5%
US stock markets pulled back on Friday as investors digested a mixed bag of data and earnings reports. All three major indices dropped on the day: the Dow lost 0.32%, the S&P 0.29%, and the Nasdaq fell 0.50%. The dollar suffered a substantial hit against most major currencies, with the DXY falling 0.6% to 107.44. US Treasury yields also pulled back, with the 2-year yield losing 2.3 basis points to 4.266% and the 10-year falling 2.2 basis points to 4.621%. Oil prices saw quieter trading, with Brent adding 0.27% to $78.50 and WTI closing just 0.05% higher at $74.66 per barrel. Meanwhile, gold attempted a fresh all-time high on the back of haven demand and a weaker dollar, ultimately closing 0.57% higher at $2,769.27 per ounce.
Dollar Under Pressure on Tariff Uncertainty
The US dollar slipped further on Friday as FX traders looked to President Trump and the new administration for clarity on trade tariffs. The dollar had appreciated strongly in recent months on the prospect of hard tariffs and inflationary conditions in the US, with many expecting continued gains after Trump’s inauguration. However, the President has yet to confirm the size of tariffs to be implemented, leading traders to hit the dollar hard, with the DXY losing over 2.5% from its January high. Traders will now monitor updates closely for clarity on these decisions, as stronger and more aggressive tariffs could push the dollar back to recent highs, while ongoing uncertainty or weaker tariff implementation could trigger further declines.
Quiet Calendar Day to Kick Off the Trading Week
It is a relatively quiet start to a central bank-heavy trading week. Chinese markets are open today but will close for the rest of the week for Lunar New Year celebrations. Key data is expected from the world’s second-largest economy midway through the Asian session, with manufacturing and non-manufacturing figures forecast at 50.1 and 52.1, respectively. Volatility is anticipated around the event. During the European session, ECB President Christine Lagarde is set to speak ahead of this week’s crucial rate decision, accompanied by the release of German IFO Business Climate data. The US session is relatively light, with US New Home Sales data the main release. However, some traders remain cautious about a scheduled TV interview with the SNB’s Martin Schlegel near the New York close, when Swiss franc liquidity tends to be at its lowest.
