The U.S. dollar is lower against most of the major currencies, with the Swiss franc leading the gains. The Australian dollar is the exception after a weaker Australian jobs report.
Treasury yields are sharply lower, but that is not providing much relief for technology stocks. Nasdaq futures remain under pressure after yesterday’s sharp declines, and we have PPI, retail sales and jobless claims coming up.
In the video, I take a look at EURUSD, USDJPY and GBPUSD, defining the bias, the risk and the targets that would give the buyers or sellers more control.
Morning Kickstart
The U.S. dollar is trading lower against most major currencies as Treasury yields retreat. However, lower yields are not translating into a broad recovery in stocks. Technology remains under pressure after yesterday’s sharp selloff, with Nasdaq futures pointing to another difficult opening.
That leaves traders with competing forces ahead of the North American session. The bond market is recovering, the dollar is softer and gold is higher, but equity traders remain cautious. PPI and retail sales will provide the next test: Are inflation pressures staying elevated, and is consumer spending holding up?
Dollar lower broadly; Australian dollar the exception
The greenback is lower against six of the seven major currencies:
- EURUSD: 1.1212, up 0.50%.
- GBPUSD: 1.3251, up 0.45%.
- USDJPY: 157.90, down 0.26%.
- USDCHF: 0.8299, down 0.56%.
- USDCAD: 1.4200, down 0.25%.
- NZDUSD: 0.5605, up 0.25%.
- AUDUSD: 0.6914, down 0.79%.
The dollar’s largest decline is against the Swiss franc. Its largest gain is against the Australian dollar.
The Australian exception has a clear domestic catalyst. September employment fell 39,300, compared with expectations for a 20,000 increase, while unemployment was 4.7%. That weaker report weighed on the AUD even as the dollar declined elsewhere. investinglive.com
Currency ranges: Where are prices within the day’s trading?
EURUSD and GBPUSD are trading in the upper portions of their ranges, while USDJPY, USDCHF and USDCAD are nearer their lows. That supports the broader dollar-selling theme.
AUDUSD is at its session low, showing that sellers continue to have the stronger hand in that pair due to the weaker jobs report.
For traders, a position near an extreme matters most when the price can extend through that extreme and stay beyond it. A break that quickly fails can instead give the other side an opportunity to push back.
U.S. stocks: Nasdaq weakness continues
U.S. futures are mixed, with the Dow higher while the broader indices remain under pressure:
- Dow futures: up 130 points.
- S&P 500 futures: down 12.94 points.
- Nasdaq futures: down 354 points.
Yesterday, the broader indices fell sharply, with AI and chip stocks particularly hard hit. This morning’s futures suggest that pressure has not cleared.
The overnight technology selloff also extended into Asia, where chipmakers followed Wall Street lower amid concerns over interest rates and the financing of AI investment. investinglive.com
European markets are mixed:
- Germany’s DAX: down 0.47%.
- France’s CAC 40: up 0.21%.
- UK’s FTSE 100: up 0.69%.
- Spain’s IBEX: up 0.21%.
- Italy’s FTSE MIB: down 0.72%.
Treasury yields move sharply lower
Treasury yields are falling across the curve:
- 2-year: 4.7488%, down 5.32 basis points.
- 5-year: 4.9061%, down 8.59 basis points.
- 10-year: 5.0975%, down 9.25 basis points.
- 30-year: 5.4352%, down 8.88 basis points.
The decline in yields is an important part of the dollar’s retreat. Lower U.S. yields can reduce the relative appeal of holding dollars, although the next round of data can quickly change that calculation.
The important distinction this morning is that bonds are recovering while technology stocks remain under pressure. Lower yields alone have not been enough to bring buyers back across the broader market.
Oil edges higher; gold and silver rebound
- WTI crude oil: $95.35, up $0.26 or 0.27%.
- Spot gold: $4,150.85, up $46.06 or 1.12%.
- Silver: $56.71, up approximately 1.99%.
- Bitcoin: $80,986, down $589 or 0.72%.
Gold is recovering alongside the weaker dollar and lower Treasury yields. Bitcoin, meanwhile, remains under pressure with technology shares.
Middle East developments continue to complicate the oil outlook. InvestingLive reports persistent tensions, including Houthi attacks on Saudi targets and disruptions affecting shipping. Separately, Washington is reportedly considering easing sanctions on shadow-fleet tankers to reduce freight costs and improve Gulf oil flows. Those headlines leave traders balancing supply risks against efforts to get more oil moving. investinglive.com
A busy 8:30 AM ET data release
The North American session brings several potential catalysts together.
Producer prices:
- Headline PPI, month over month: +0.5% expected versus +0.4% previously.
- Headline PPI, year over year: 5.3% expected versus 5.4%.
- PPI excluding food and energy, month over month: +0.3% expected versus +0.2%.
- PPI excluding food and energy, year over year: 4.4% expected versus 4.6%.
The distinction between monthly and annual readings matters. Annual inflation can ease while the latest monthly increase accelerates. Traders need to look beyond the headline year-over-year number to assess whether underlying pressure is improving.
Retail sales:
- Headline sales: +0.3% expected versus a revised +1.2% previously.
- Sales excluding autos: +0.5% expected versus a revised +1.4%.
The prior headline reading was revised up from 1.1%, while the ex-auto reading was revised up from 1.3%.
Labor market:
- Initial jobless claims: 200,000 expected versus 197,000.
- Continuing claims: 1.710 million expected versus 1.716 million.
Regional manufacturing:
- Empire State manufacturing: 10.25 expected versus 7.60.
- Philadelphia Fed manufacturing: 28.4 expected versus 37.8.
The combination matters. Strong spending alongside firm inflation could challenge the Treasury rally. Softer spending would raise a different question about growth. The first move after the releases may reflect one report; the more lasting move will depend on how traders assess the full package.
This article was written by Greg Michalowski at investinglive.com.