News & Analysis

US Equities Eke out a Gain, Dollar Battered, Bonds Bid

11 July 2023 By Lachlan Meakin


Major US indices finished in the green in Monday’s session as lowered inflation expectations saw treasury yields come off the recent highs, bolstering stocks but seeing the USD take a big hit.

The Russell 2000 was the clear outperformer (+1.64%) while the Nasdaq squeaked into the green after spending most of the session in negative territory, this saw the Nasdaq/Russell 200 ratio again find stiff resistance at 8.2 after another rejection from this level.

Bonds saw a big move to the upside as treasury yields tumbled after used car figures saw a rapid decline in price, which will spill into future inflation readings, the US 10 year yield pushing back below 4%.

FX Markets

USD sold off on Monday on the back of the sharp decline in US Treasury yields. The US Dollar Index breaking through the minor support and psychological level of 102.00.

EUR saw gains, mostly due to a weaker USD with EURUSD testing 1.10 to the upside, its highest level since June 22nd and pushing to the top of its recent range. ECB member Nagel also helped the EUR somewhat, reaffirming that inflation remains too high, adding that while GDP may slow, he is convinced a hard landing can be avoided.

JPY saw solid gains, with USDJPY falling from peaks of 143 to lows of 141.30 the Yen supported by the move lower in US yields, and traders being wary about possible BoJ intervention if the cross rises above the 145 level.

Gold saw a wild ride in Monday’s session, finish mostly flat for the day after a sharp dip lower early in the session to test support at 1912 USD an ounce. This is despite a weaker USD and lower yields, XAUUSD looking bearish while it holds below the 1932 resistance level.

In today’s economic announcements, the main risk event will be jobs data from the UK at 06:00 GMT. The Rates market is split at the moment as to the size of the next hike from the Bank of England at their August meeting, this data point will be influential in how the market prices the odds, so expect some volatility in GBP at this time if the figure is off expectation.


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