The USD index is flirting with one-week highs above 106.60 during the early deals in Europe
Wall Street equities closed higher on Monday to shake off early weakness, extending a positive run for the market. Earlier in the session, major indices were pressured by a report that showed the Federal Reserve Bank of New York’s August general business conditions index plunged to -31.3, by the second-most in data back to 2001. Still, the Dow Jones Industrial Average added 0.45% to close above its 20-DMA for the first time in four months. The S&P 500 rose 0.4%, while the Nasdaq Composite edged 0.62% higher.
Asian equity markets tracked US indices north to finish mostly higher on Tuesday. Australia’s S&P/ASX 200 gained nearly 0.6% after BHP Group Ltd reported a record underlying profit in fiscal 2022. The world’s largest miner also declared a final dividend of $1.75 per share. Elsewhere, Japan’s Nikkei 225 finished nearly unchanged while Hong Kong’s Hang Seng index was down more than 1% to give up early gains. The Shanghai Composite gained less than 0.1% as Fitch ratings has downgraded Chinese homebuilder Country Garden Holdings’ rating, citing a weakening company’s financial flexibility due to challenges in China’s property sector.
European stocks were a touch higher at the open, with gains limited as investors continue to express concerns about surging energy prices and worries about the economic outlook. The pan-European Stoxx 600 index climbed just 0.2% in early trade. The overall risk mood is more measured today, with S&P 500 futures being slightly down. On the data front, the U.K. claimant count dropped 10,500 last month, suggesting the labor market remained resilient.
In currency markets, the US dollar extends the advance on Tuesday, with the USD index flirting with one-week highs above 106.60 during the early deals in Europe. Traders now look ahead to the Fed minutes, due out on Wednesday, for clues about the pace of rate hikes in the future. Should the central bank deliver a less hawkish tone, the greenback may lose the upside momentum to reverse the recent gains later in the week. EURUSD fell below the 20-DMA at the start of the week, extending losses to the 1.0130 zone on Tuesday. Should the shared currency fail to hold above 1.0100, the selling pressure will intensify in the near term.