The USD index switched into recovery mode after yesterday’s dip to more than one-month lows
Asian stock markets were mixed on Tuesday as risk-on tone started to abate after positive start to the week. China’s Shanghai Composite was up 1.19% after the Cabinet issued a series of policies to bolster economic stability. On the data front, May’s manufacturing and service PMIs came in higher than expected but stayed in contraction territory. In Japan, the Nikkei 225 index fell 0.33% after the data shows that industrial production fell 1.3% month-on-month and retail sales grew 2.9% year-on-year in April.
In Europe, equities opened lower after elevated German inflation data rekindled worries about the pace of tightening from central banks. German EU-harmonized inflation came in at 8.7% in May, exceeding expectations of 8.0%. The pan-European Stoxx 600 slipped 0.5% in early trade, with tech stocks leading the losses. U.S. stock futures were muted in early premarket trade.
Meanwhile, the USD index switched into recovery mode after yesterday’s dip to more than one-month lows. The dollar derived support from the 101.30 area to get back to the 101.70 zone on Tuesday. Despite the bullish bias reemerged, downside risks continue to persist at this stage, especially as prices are still holding below the 102.00 figure for the time being. As such, EURUSD fell back to 1.0730 from the yesterday’s peak of 1.0785. As bears regained control, the common currency is likely to see a deeper retreat before another rally takes place.
Elsewhere, the bitcoin price surged to three-week highs above $32,000 earlier today before correcting slightly lower. The BTCUSD pair retains bullish bias after a rally witnessed yesterday when the coin exceeded the $30,000 psychological level. Now, the largest digital currency needs to hold above $31,000 in order to stay afloat. However, the upside potential is likely to stay limited in the near term.