Dollar loses ground after Fed officials rule out aggressive hike
The dollar’s weakness is resuming today as an increasing number of Fed officials downplayed the possibility of a 50 basis points rate hike in March, suggesting that monetary tightening should be more gradual in order to avoid causing panic in the markets. Moreover, the rebound in global equities, alongside the retreating Treasury yields and a chance for profit-taking after the dollar’s extended rally added further downside pressures on the greenback. Later today, investors will be closely eyeing the US ISM Manufacturing PMI, which will provide insights into the broader health of the US economy.
Meanwhile, the euro is nudging higher, capitalizing on solid data releases earlier today. More specifically, unemployment in the Eurozone decreased to 7.0% versus the 7.1% projection, while Eurozone Manufacturing PMI rose to a five-month high, depicting an acceleration of manufacturing activity as supply disruptions seem to be fading. Furthermore, market anticipation that the persisting inflationary pressures will force the ECB to adopt a more hawkish stance, alongside surging German bond yields added more fuel to the euro’s rally.
In the broader FX spectrum, commodity-linked currencies such as the aussie, kiwi and loonie are appreciating against the dollar on the day, supported by the cautiously positive risk tone in the markets and the elevating commodity prices. Elsewhere, the intensifying geopolitical flare-ups seem to be favoring the safe havens, with the franc and yen both gaining ground in today’s session.
US stocks cool off; global stocks surge
Wall Street is set for a mixed opening today despite yesterday’s strong performance as investors seem to be grappling with uncertainty over the timing and pace of the Fed’s upcoming monetary tightening. E-mini futures for the tech-heavy Nasdaq are edging higher in pre-market trade, while Dow Jones and S&P 500 futures are almost unchanged, fluctuating between -0.05% and 0.05% in the time of writing. On the other hand, major European indices are gaining more than 1% in the current session, catching up with Wall Street’s rally the previous day. Today, tech giants such as Google, AMD and PayPal report their Q4 earnings, which might provide traders with fresh trading impetus.
Oil’s rally pauses; gold shines
Oil futures are trading lower in the current session amid increasing speculations that the OPEC+ is going to proceed with gradual production hikes in the upcoming months. On the other hand, gold is back above its $1,800 mark and continues to edge higher, significantly benefiting from retreating US yields, increasing geopolitical tensions and the softer dollar.
