Macro Roundup (Jan 10)

SHANGHAI, Jan 10 —This is a roundup of global macroeconomic news last night and what is expected today.

The U.S. dollar on Monday slid to a seven-month low against the euro as traders bet recent economic data would prompt the Federal Reserve to slow the pace of interest rate hikes, while riskier currencies benefited from China reopening its borders.

The euro was up 0.96% at $1.0747, its highest level versus the greenback since June 9, adding to Friday’s 1.17% increase.

Sterling surged 0.87% to $1.21975 against the dollar, building on Friday’s 1.5% rally, while the Swiss franc jumped 0.82% to $0.92, its strongest since early March.

The moves continued the trend lower for the dollar, which in the final three months of 2022 posted its biggest quarterly loss in 12 years. That was driven mainly by investors’ belief that the Fed will not raise rates beyond 5%, from its current range of 4.25%-4.50%, as inflation and growth cool.

Fed fund futures show investors believe the most likely outcome for the Fed’s February meeting is for a 25 basis- point increase.

Gains in technology helped the Nasdaq Composite skirt losses on Monday as traders added to bets that inflation may be easing.

The Nasdaq was the only major index to end the day up as it got boosted by a nearly 6% rally in Tesla shares. The tech-heavy index gained 66.36 points, or 0.6%, to end at 10,635.65 points.

The Dow Jones Industrial Average dropped 112.96 points, or 0.3%, to end at 33,517.65 as defensive drug stocks like Merck and Johnson & Johnson weighed on the average. The S&P 500 lost 0.1%, or 2.99 points, to close at 3,892.09, but the information technology sector’s 1.1% gain help pare the index’s losses.

Oil prices rose over 1% on Monday after China’s move to reopen its borders boosted the outlook for fuel demand and overshadowed global recession concerns.

The rally was part of a wider boost for risk sentiment supported by both the reopening of the world’s biggest crude importer and hopes for less-aggressive increases to U.S. interest rates, with equities rising and the dollar weakening.

Gold prices cooled slightly after hitting an eight-month high on Monday, as a weak dollar’s boost was offset by Federal Reserve officials reiterating their aggressive stance against inflation.

Spot gold rose 0.3% to $1,870.45 per ounce after hitting its highest since May 9 earlier in the session at $1,881.5. U.S. gold futures settled up 0.4% at $1,877.8.

The dollar was near its lowest in seven months, making gold cheaper for overseas buyers. Benchmark U.S. 10-year Treasury yields hit three-week lows.

European markets rose to their highest level since May 2022 at the start of the new trading week, with market sentiment buoyed by a further reopening of the Chinese economy.

The pan-European Stoxx 600 index closed 0.9% higher, with most sectors and most major bourses in positive territory. Technology stocks led gains, up 3.4%, followed by travel and leisure stocks, up 2.5%.