The USD index keeps holding above the 104.00 mark and could stage another rally after some hesitation
Wall Street stocks gained in late trading on Thursday as the US 10-year Treasury yields continued to retreat from the recent multi-year peaks. The Dow Jones Industrial Average rose 0.64%, the S&P 500 gained 0.95%, and the Nasdaq Composite rose 1.62%. Still, investors continued to mull over the likelihood of an economic downturn, especially after fresh data showed that S&P global services PMI for the US fell sharply in June, with contractions in output and new orders weighing heavily on the headline figure. Meanwhile, Federal Reserve Chair Powell reiterated that the central bank is “strongly committed” to bringing down inflation.
Following suit, Asian stock markets advanced across the board on Friday, with rising commodities adding to a more upbeat tone among regional investors. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1%, with Alibaba rallying 5.5% amid signs that China’s technology crackdown is abating. Japan’s Nikkei rose 1.23% for a 1.6% weekly gain after the data showed that Japanese inflation topped the Bank of Japan’s 2% target for a second straight month.
In Europe, equities opened higher as positive risk sentiment continued to persist ahead of the weekend, with the Stoxx Europe 600 gaining 0.4% in early deals. On the data front, German IFO business climate index came in at 92.3 in June versus last month’s 93.0 and the consensus estimates of 92.9. Also on the negative side, the current economic assessment eased to 99.3 as compared to May’s 99.5. Still, investors were little affected by a downbeat survey out of Europe’s largest economy.
In the currency market, the US dollar traded marginally lower, trimming early losses in recent deals. The USD index keeps holding above the 104.00 mark and could stage another rally after some hesitation as risk aversion could reemerge at any point due to persistent recession fears. EURUSD has settled above 1.0500 after yesterday’s plunge that took the prices to 1.0480. The pair still needs to overcome the descending 20-DMA, today at 1.0592, in order to stage a more decisive bounce from long-term lows registered last month around 1.0350.