The dollar is back under pressure as recovery momentum looks too modest
Wall Street stocks fell in choppy trading on Monday to take a pause from last week’s spectacular rally even as Fed’s Brainard noted that the central bank could soon slow the pace of its interest rate hikes. On the other hand, Waller said over the weekend that the endpoint for the federal funds rate is still a way out there. The Dow Jones Industrial Average fell 0.6%, the S&P 500 was lower by 0.89%, and the tech-heavy Nasdaq Composite dropped 1.12%.
Despite the broadly negative cues from the US, Asian equities were mostly higher on Tuesday, with MSCI’s broadest index of Asia-Pacific shares outside Japan rallying 2%. Leading the gains, Hong Kong’s Hang Seng index surged nearly 4% while China’s Shanghai Composite added 1.64% as the authorities announced an easing of some of its coronavirus measures. On the negative side, the Australian stock market modestly lower, extending the losses in the previous session. The Japanese stock market was slightly higher on Tuesday, with the Nikkei 225 adding just 0.1%.
In Europe, stocks opened mixed as investors keep watching events at the Group of Twenty summit in Bali that kicks off on Tuesday. US stock index futures point higher in early pre-market deals, with overall market sentiment looking more upbeat after negative start to the week. Still, the upside potential for stocks remains limited, especially as investors shift their focus towards the US retail sales report due on Thursday.
Meanwhile, the US dollar came under renewed selling pressure after a mild bounce at the start of the week. The USD index was capped by the 107.00 handle to earlier in the day to turn negative. As such, EURUSD climbed to fresh three-month highs around 1.0385, thus targeting the 1.0400 next barrier early in Europe. In a wider picture, however, the shared currency is yet to confirm the breakout, with the overall trend bearish.