A hung parliament failed to spook investors
Wall Street stocks climbed to fresh record highs on Friday as investors were inspired by the latest jobs report. The data showed that the US economy created 206,000 jobs in June, while the unemployment rate rose to 4.1% from 4%, reigniting hopes for a rate cut from the Federal Reserve. After the release, market participants hiked their bets on a September cut to about 77%, up from 64% a week ago. Against this backdrop, the S&P 500 index advanced 0.54%, while the Nasdaq Composite rallied nearly 1%. Both indexes saw fresh all-time highs to finish at records. The Dow Jones gained less than 0.2%.
In turn, the dollar was pressured by an unexpected rise in jobless rate. The USD index extended the decline along with Treasury yields ahead of the weekend. The greenback finished below the 105.00 figure after finding a local support around mid-June lows in the 104.80 area. On Monday, the dollar stays on the defensive, but the selling pressure has eased somehow, with the 105.00 figure in focus.
In part, the dollar struggles at the start of the week due to positive risk sentiment across the financial markets. While Asian stocks were mixed-to-lower on Monday, European equities shrugged off surprise election results in France. After the initial bearish reaction to an expected hung parliament in France after a surprise win for a left-wing coalition of parties, regional stocks bounced to settle in positive territory. The French CAC 40 erased earlier losses to rise 0.52% in recent deals. The pan-European STOXX 600 was up 0.34% as of writing.
Similarly, the euro rose after an early dip during the Asian hours on Monday. During the slide, EURUSD managed to hold above 1.0800 before climbing back to mid-June highs in the 1.0845 area that has been capping gains since last week. The common currency has been trending north for the eighth session in a row already, buoyed by a combination of a weaker dollar and mostly upbeat risk sentiment across stock markets. A decisive break above 1.0850 would add to bullish technical picture in the near term.
