US Stocks Drift Lower After Strong Data – Nasdaq Down 0.5%
US stock markets edged lower from record highs yesterday as investors digested a robust jobs report, fresh earnings updates from the tech sector, and looked ahead to the approaching US election. The Nasdaq slid 0.52% on the day, followed by the S&P and Dow, which closed down 0.27% and 0.15% respectively. US Treasury yields showed mixed movement, but remained near multi-month highs, with the 2-year yield up 3.5 basis points at 4.154% and the 10-year down 1 basis point to 4.264%. The dollar softened, aided by stronger-than-expected German CPI data, which pushed the Euro higher; the DXY edged down 0.16% to 104.07. Meanwhile, oil prices surged over 2% following an unexpected drop in US stockpiles, with Brent rising 2.01% to $72.55 and WTI climbing 2.08% to $68.61. Gold hit another record high, gaining 0.5% on the day to close at $2,788.36.
Dollar in Focus Ahead of Key Data and US Election
The US dollar has experienced a striking recovery over the past few weeks, with the DXY gaining over 4%. Traders are now evaluating how much further the dollar could rise, with pivotal data due in the coming days, alongside an imminent election result and an expected Fed rate decision next week. While all these factors will influence the dollar, the election result may have the most significant impact in the longer term. Betting markets currently price a Trump victory at 62%, with a “clean sweep” potentially accelerating the dollar’s upward trend. However, if Kamala Harris starts to make up ground, we may see the DXY retreat to recent ranges, with short-term support around 103.85, marked by the 200-day moving average.
Another Busy Day for Traders Ahead
Traders face a packed schedule today as the macroeconomic event calendar goes into overdrive. The Asian session has its busiest day of the week, with Australian retail sales data, Chinese manufacturing and non-manufacturing PMI updates, and the Bank of Japan’s latest meeting later in the day. The European session remains relatively quiet, but the US session promises a burst of activity. Key indicators include the Fed’s preferred inflation measure, the PCE Price Index, along with the Employment Cost Index and weekly unemployment claims. Any surprises could lead to substantial market moves, with the Chicago PMI data and earnings reports from tech giants Amazon and Apple to follow later in the day.
