The Dollar Index (DXY) is declining as equity markets improve, buoyed by optimism surrounding a potential US government shutdown avoidance. While the dollar gains against the JPY and CHF, gold has reached over $3,000 per ounce, reflecting increased demand amidst global uncertainties.
Most major currencies have appreciated against the USD, leading to a potential week-ending loss for the DXY. Chinese stock markets saw gains exceeding 2% due to anticipated stimulus measures from the government.
Stock Market Performance
US equity futures are positive, but a portion of S&P 500 stocks remains in correction territory, with a 6% overall decline since the start of the year. The Fedex stock has dropped by 14% year-to-date, indicating potential slowing in global trade.
The University of Michigan’s sentiment data is expected to show a continuing decline in consumer confidence, driven by concerns over tariffs and economic slowing. Gold has retreated to approximately $2,980 as profit-taking and rising US yields impact its value.
Both EUR/USD and GBP/USD are trading in consolidation, with EUR/USD eyeing the 1.0900 level despite previous pullbacks. The cryptocurrency market has seen a slight increase, gaining $352 million in valuation.
Central Bank Policies
Looking ahead, central banks will be a key focus as the Fed decides on policy amid recession concerns, while the Bank of Japan and Swiss National Bank are expected to signal changes in interest rates.
The US dollar is struggling as stock markets show strength, largely driven by hopes that Washington will sidestep another government shutdown. However, while the greenback weakens against most currencies, it is maintaining gains against the Japanese yen and Swiss franc. At the same time, gold surged past $3,000 per ounce, a reflection of investors shifting towards safer assets due to ongoing worries about global stability.
With most major currencies strengthening against the dollar, we are seeing the Dollar Index under pressure. Barring a turnaround, it appears poised to post a weekly decline. Meanwhile, markets in China advanced by over 2%, fuelled by expectations that Beijing will roll out fresh economic support.
While futures for US equities are pointing upward, not all stocks are joining the rally. A meaningful share of the S&P 500 remains in correction territory, and the index as a whole is still down 6% for the year. Likewise, FedEx’s 14% decline since January hints that global trade may be losing momentum.
Traders are watching consumer sentiment readings from the University of Michigan, which are forecasted to slip further. Concerns over tariffs and a possible economic slowdown weigh on consumer confidence. As a result, gold has pulled back from its highs, now hovering near $2,980, as profit-taking sets in and US Treasury yields tick higher.
In the currency markets, both the euro and the pound are consolidating against the dollar. The euro-dollar pair is keeping an eye on the 1.0900 level despite prior declines. At the same time, digital asset markets have edged up slightly, with a $352 million boost to overall market value.
Looking ahead, attention will shift to major central banks. The Federal Reserve faces a delicate balancing act as it weighs policy decisions against the risk of recession. Meanwhile, both Japan’s central bank and Switzerland’s policymakers are expected to hint at adjustments to their interest rate strategies.
