The US currency remains on the defensive and could see deeper losses before a reversal takes place
Wall Street indexed finished mixed overnight, with the Dow Jones bucking the positive trend to shed 0.16%. The S&P 500 and the Nasdaq Composite gained 0.43% and 0.90%, respectively, to notch fresh all-time highs. In individual stocks, Microsoft and Netflix each rose about 1.3% while Apple jumped 3%. After yesterday’s session, the S&P 500 is up 3% in August, while the Dow Jones Industrial Average and the Nasdaq Composite have risen 1.3% and 4% since the start of this month.
Asian equities erased early losses to finish in the green on Tuesday despite weaker-than-expected Chinese PMIs. The manufacturing PMI came at 50.1 in August as compared to 50.4 in July. In Japan, industrial output contracted in July. Still, the Nikkei 225 gained over 1% during the session. MSCI’s gauge of Asia Pacific stocks outside Japan was up 1%.
In Europe, stocks opened marginally higher, but gains are limited, with travel stocks hit by new Covid-related restrictions. On the data front, French inflation rose to 0.7% in August, giving a 12-month inflation rate of 2.4%. on the positive side, equities continue to benefit from the dovish nature of Powell’s speech at the Jackson Hole symposium on Friday.
Meanwhile, the dollar came back under the selling pressure on Tuesday as positive risk sentiment prevails in the global financial markets. As such, EURUSD extended gains to fresh more than three-week highs around 1.1830. However, the pair is yet to confirm a break above the 1.1800 figure on a daily closing basis.
Later this week, the greenback could erase recent losses if the upcoming economic data (including Friday’s key jobs figures) surprises on the upside. For now, however, the US currency remains on the defensive and could see deeper losses before a reversal takes place.
