Market Wrap – US dollar slide continues

Moves in financial markets from last Friday continued to spill over into the US trading session, with the US dollar edging higher at some pace and stocks falling.

In the US session the EURUSD pair nudged below the 1.0750 level, while the S&P500 stayed around the 4,100 level but remained lower on the day around the scene of a golden cross on the charts.

Currently the DXY is rising towards the 103.60 level, which is the location of its 50-day moving average. The US dollar’s 200-day moving average is found around the 106.30 area on the charts.

Markets were likely also booking ahead of a speech by Federal Reserve Chairman Jerome Powell Tuesday before the Economic Club of Washington.

Powell’s comments on disinflation caused investors to bid shares higher last week and overlook another rate hike out of the central bank. It will also be interesting to see if he mentions Friday’s strong jobs numbers.

Currently, investors seem to be looking past rate hikes and poor earnings, focusing instead on recent data that shows inflation trending lower in the hopes that the economy is headed for a soft landing and profits will be revived later in the year.

Earnings from the likes of UBER, Disney, BP, Robin Hood, and AstraZeneca are also being pushed out this week, which could create more market volatility.

Volatility is also seen in the Japanese yen today. Basically, the yen fell across the board shortly after the start of trading this week on a report that Bank of Japan Deputy governor Masayoshi Amamiya has been approached to take the reigns from Kuroda.

The two share a familiar policy view, so the chance of a hawkish shift is erased, which could push back expectation of a rate hike anytime soon.

The move lower in the yen has extended in US trading session as the buck gains traction. Instead, it’s rising global yields sparking a move lower in the yen and higher in USD/JPY.