The dollar is gaining ground in European morning trading, increasing against most major currencies, except the yen. The EUR/USD pair has decreased by 0.5% to 1.0840, with price action slipping below both the 100 and 200-hour moving averages.
The GBP/USD pair is also down by 0.4% to 1.2955, facing resistance at the 1.3000 level. Meanwhile, the AUD/USD has fallen by 0.9%, attributed to a poor jobs report where the jobless rate remained stable but the employment change was notably negative.
Market Risk Appetite Weakens
Commodity currencies are under pressure as market risk appetite seems to be waning. S&P 500 futures have only increased by 0.1% today, while European indices, including the DAX, have dipped by over 1%.
Despite Wall Street showing some recovery in trading yesterday, apprehension in the market persists.
This morning’s moves indicate a strengthening dollar, with downward pressure on most counterparts. The euro and pound have both lost ground, with EUR/USD pulling back to 1.0840 and GBP/USD slipping below 1.3000. With both trading beneath key moving averages, sellers have control for now. The Australian dollar’s drop is more pronounced, falling nearly 1% as employment data fell short of expectations. Although the unemployment rate was steady, the total number of jobs declined, reinforcing concerns about weakness in that economy.
Currencies linked to commodities are facing difficulties, as broader sentiment towards risk appears to be deteriorating. Futures tied to the S&P 500 are barely in positive territory, and European stock markets are clearly under strain. Germany’s DAX, along with others, has lost over 1% in early trading, signalling that investors are steering away from riskier positions.
Investor Caution Persists
While markets in the United States attempted a modest recovery yesterday, caution remains evident. The limited upside in futures trading today suggests hesitation among financial participants, with many monitoring whether the recent firmness in the dollar continues. The lack of follow-through in equities, combined with losses in risk-sensitive assets, suggests defensive positioning remains in place.
