The USD index has steadied after yesterday’s rally towards fresh multi-year tops around 106.80
After a plunge in early deals, US stocks finished mostly higher on Tuesday to start the holiday-shortened week. The Dow Jones dropped 0.4%, the S&P 500 added 0.2% and the Nasdaq Composite advanced 1.75%. Energy stocks took a hit as oil prices dipped nearly 10% amid rising recession concerns that continue to cloud the outlook for global oil demand. The benchmark 10-year Treasury yield and the 2-year yield inverted overnight, which market players consider a negative signal for the economy. Later today, the minutes of the Federal Reserve’s June meeting will come into investors’ focus.
Asian stock markets were down on Wednesday as fears of an economic downturn persisted. Against this backdrop, markets failed to capitalize on a possible rolling back of some US tariffs on Chinese goods. The Shanghai Composite index fell 1.43%, Japan’s Nikkei 225 gave up 1.20%, Hong Kong’s Hang Seng shed 1.66%, and South Korean Kospi plunged more than 2%. Adding to a negative tone in the regional markets, the surge in COVID-19 infections in China reignited concerns about new lockdowns.
In Europe, however, equities jumped at the open as markets attempted to bounce after heavy losses witnessed in the previous session. The pan-European Stoxx 600 rallied 1.4% in early deals, with all sectors trading in positive territory. ON the data front, German industrial orders increased in May by 0.1% on the month after a decline of 1.8% in the previous month. Meanwhile, Eurozone’s construction PMI came in at 47 last month versus 49.2 in May.
As for currency markets, the USD index has steadied after yesterday’s rally towards fresh multi-year tops around 106.80. The greenback has settled just below the 106.50 zone in early European deals, refraining from a more pronounced correction despite the overbought conditions and some improvement in risk sentiment. Now, traders shift their focus to the FOMC meeting minutes, which is expected to sound hawkish.