The dollar has shifted into a consolidative mode after a rally witnessed late last week
Wall Street stocks finished higher on Friday, with the S&P 500 and the tech-heavy Nasdaq recording fresh all-time highs as investors cheered upbeat economic data out of the United States. The manufacturing PMI came in at 53.6 in August, up from 50.9 in the previous month. The service sector index rose to 54.8 for August, a 17 month high, and up from 50 in July. Meanwhile, existing homes in the U.S. rose 24.7% between June and July to a seasonally-adjusted annual rate of 5.86 million. Compared with a year ago, sales were up 8.7% last month. As a result, the Dow Jones Industrial Average rose 0.7%, the S&P 500 added 0.3%, and the Nasdaq Composite Index was up 0.4%, after carving out a new intraday record high at 11,323.71.
On Monday, Asian stocks extended the ascent, digesting strong economic updates out of the US as well as coronavirus treatment hopes after the FDA said it had authorized the use of blood plasma from recovered patients as a possible treatment for the virus. The Nikkei 225 added 0.3%, the Hang Seng in Hong Kong advanced 1.5%, the Shanghai Composite Index rose 0.2% and Australia’s S&P/ASX 200 gained 0.2%.
European stocks opened higher as well after President Donald Trump signaled an aggressive stance to push medical treatments to return the economy closer to normalcy. As a result, the Stoxx Europe 600 jumped 1.4% early on Monday after a drop of 0.8% last week. investor attention is now shifting to the Jackson Hole conference, where Federal Reserve Chairman Jerome Powell is expected to outline the central bank’s monetary policy course.
In other markets, the dollar has shifted into a consolidative mode after a rally witnessed late last week. Despite the recent recovery, the greenback remains on the defensive, staying within a bearish trend as risk-on sentiment prevails in the global markets and Trump’s aggressive foreign policy continues to hurt the dollar’s appeal as the global reserve currency. As such, EURUSD is now back above 1.18 but still struggles to stage a more decisive recovery towards 1.19. On the other hand, the fact that the common currency is approaching the 1.20 psychological handle could attract some profit-taking that could halt the rally towards fresh long-term highs.
