The US dollar keeps trending higher for the fourth session in a row
Powered by tech companies, US stocks finished higher on Thursday to push indexes back into positive territory on the monthly charts. The Dow Jones added 0.54% to erase early losses. The tech-heavy Nasdaq Composite rallied 1.35% and the S&P 500 gained 0.88%. In individual stocks, shares of Apple advanced around 3.3% after Bank of America upgraded the stock to buy. On the data front, first-time filings for unemployment insurance came in at 187,000 last week, down 16,000 from the previous period and stronger than expected. In a knee-jerk reaction to the release, investors expressed concerns over a strong labor market that may mean fewer rate cuts from the Fed than many are expecting.
After Wall Street recouped most of the week’s earlier losses, Asia markets mostly advanced on Friday. Regional markets also took some positive cues from an upbeat forecast by Taiwan Semiconductor Manufacturing Corp, the world’s largest contract chipmaker. Tokyo’s Nikkei 225 index climbed 1.42% after the data showed that Japanese consumer price index inflation fell in line with expectations in December. Bucking the trend, China’s Shanghai Composite gave up 0.47%, struggling to extend its recovery from long-term lows. The index was headed for a third straight week in red. Earlier, Shanghai Composite was pressured by weak GDP figures for the fourth quarter.
Shaking off downbeat sentiment from earlier in the week, Europe’s stock markets rose Friday following a tech-led rally on Wall Street. The Stoxx 600 index opened nearly 0.5% higher, with all sectors in the green. On the data front, UK retail sales disappointed, coming down by 3.2% in December, significantly more than expected. US stock index futures were near the flatline in early pre-market deals. Suggesting risk demand could wane again ahead of the weekend.
In currencies, the US dollar keeps trending higher for the fourth session in a row on Friday, buoyed by rising expectations for less aggressive rate cuts by the Fed than expected earlier. Strong economic reports coupled with hawkish Fedspeak are tempering the odds for a March Fed rate cut. As the benchmark 10-year US Treasury bond yields refreshed five-week highs near 4.18%, the USD index has settled around 103.50, refraining from probing this week’s highs in the 103.70 area. On the weekly timeframes, the technical picture keeps improving gradually.