SHANGHAI, Jun 22 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.
The dollar retreated from two-month highs on Monday as investors evaluated whether a perceived hawkish tilt by the Federal Reserve last week will mark a pause in the dollar bear trend that has been in play since March 2020.
The dollar has surged since the US central bank on Wednesday said that policymakers are forecasting two rate hikes in 2023. That led investors to re-evaluate bets that the U.S. central bank will let inflation run at higher levels for a longer time before hiking rates.
The greenback dropped on Monday but held above where it traded before the Fed’s statement on Wednesday.
“There was a rush to clean out outstanding positions that were a little bit maybe too skewed towards dollar shorts,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto. Now, “the market’s trying to catch its breath a little bit before it really decides whether or not to extrapolate this trend towards a stronger dollar.”
On Wall Street, US stock futures opened slightly higher on Monday night after the Dow Jones Industrial Average posted its best day since March.
Dow Jones Industrial Average futures rose by 35 points, or 0.10%. S&P 500 and Nasdaq 100 futures climbed 0.10% and 0.04%, respectively
During the regular session, the Dow rose 586.89 points, or 1.76%. The S&P 500 ended the day up 1.4% and the Nasdaq Composite rose 0.79%.
The indexes recouped some of last week’s steep losses when the Federal Reserve’s updated projections on inflation cued a sell-off. Commodity stocks like Devon Energy and Occidental Petroleum led the market comeback Monday after being hit hard last week. Norwegian Cruise Line and Boeing stocks climbed more than 3% as the economy continues to reopen.
“Stocks staged a strong rebound on Monday, although all the S&P did was recoup its decline from Friday,” according to Vital Knowledge’s Adam Crisafulli. “Cyclical stocks may have rebounded on Monday, but they are still in a downtrend and investors should use rallies to book profits.”
Oil prices soared on Monday, gaining on a pause in talks to end US sanctions on Iranian crude, and as the dollar retreated from two-month highs.
Brent crude for August gained 1.89% to settle at $74.90 per barrel. US West Texas Intermediate (WTI) crude for July rose 2.82% to $73.66 per barrel.
Both benchmarks have risen for the past four weeks on optimism over the pace of global COVID-19 vaccinations and expected pick-up in summer travel. The rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.
Bank of America said that Brent crude was likely to average $68 a barrel this year but could hit $100 next year on unleashed pent-up demand and more private car usage.
Oil was boosted by a weaker US dollar, which can send speculative investors into greenback-denominated assets like commodities.
Gold on Monday clawed back some losses from its biggest weekly percentage drop since March 2020, as a pause in the US dollar’s rally helped restore the metal’s allure.
Spot gold was up 1.1% at $1,782.83 per ounce by 1:48 p.m. EDT (1748 GMT), while U.S. gold futures settled up 0.8% at $1,782.90.
“People are using the correction to buy gold, at these price levels, there is value to hold positions in gold, especially for the long run,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago
Gold prices fell 6%, or $113 an ounce, last week as the U.S. Federal Reserve signaled it would soon start tapering its asset purchases and could start raising interest rates in 2023.
But the dollar index has retreated from 2-1/2-month highs, prompting investors to turn to gold, which fell for six straight sessions before Monday’s bounce.
Key economic data slated for release today include UK CBI Industrial Order Difference in June, the annualized total pending home sales in the US in May and Eurozone consumer confidence index for June.