The USD index is pressured by positive risk sentiment, but a broader bullish trend remains intact
Wall Street stocks rallied on Friday to stage the first weekly advance this month. The Dow rose 2.68%, the S&P 500 was 3.06% higher and the Nasdaq Composite advanced 3.34%. Despite a spectacular bounce, the near-term bearish base case remains intact amid persistent recession risks, especially as the University of Michigan survey on Friday showed that consumer sentiment hit a record low reading of 50 in June. On the other hand, investors seem to have interpreted weak data as a reason for the Fed to act less aggressively on interest rates.
Asian stock markets advanced across the board on Monday, with MSCI’s broadest index of Asia-Pacific shares rising 1.81% at the start of the week. China’s Shanghai Composite climbed 0.88% even as PBOC advisor said he expects the country’s GDP growth to grow 4.7% this year versus the 5.5% official target. On the data front, China’s industrial profits data for May came in at +1% y/y after +3.5% in the previous month.
In Europe, equities rallied to two-week highs amid widespread optimism that continues to persist across the board at the start of the week, mirroring a sharp ascent on Wall Street ahead of the weekend. The pan-European Stoxx 600 index gained more than 1% in early deals, with investors looking for more updates from the summit of the Group of Seven leaders. Also, the ECB will be hosting a forum on central banking this week and that is scheduled for 27 to 29 June.
Meanwhile, the safe-haven US currency stays on the defensive today, holding around ten-day lows below 104.00 in early European trading. The USD index is pressured by positive risk sentiment, but a broader bullish trend remains intact for the time being. EURUSD is flirting with the descending 20-DMA for the first time in more than two weeks, adding 0.3% on the day. However, the shared currency is unlikely to regain the 1.0600 mark on sustained basis in the near term.