The USD falls against the EUR, JPY, and GBP even as yields rise. EURCHF recovers.

Market Overview

The U.S. dollar is showing mixed signals, experiencing a slight dip against key currency pairs. While it’s strengthening against the Swiss Franc and remaining flat against the Canadian dollar, it’s also weak compared to the Australian and New Zealand dollars. This comes in the context of U.S. stock futures trending downward.

Yields in the United States are on the rise—around 4.30% for the 10-year and 3.82% for the 2-year, which marks an increase of 7.7 basis points. This shift appears to reflect the Federal Reserve’s cautious stance regarding inflation. Although they chose to keep interest rates steady, Chairman Powell has stressed that inflation risks are more pressing than those related to employment.

Attention is now turning toward European central banks, with the Bank of England and the European Central Bank expected to maintain their current interest rates following today’s meetings.

In commodities, WTI crude oil prices remain elevated, fluctuating between the mid to high $90s, with lows nearing $100 but not surpassing it. Geopolitical tensions in the Persian Gulf continue to raise concerns about supply stability. While reports indicate that loading has recommenced at Saudi Arabia’s Yanbu port, it hasn’t fully alleviated worries, as the market still anticipates potential disruptions.

Interestingly, the Swiss National Bank has also decided to keep interest rates steady at 0.00%. However, they seem more inclined to intervene in the foreign exchange market to curb the strength of the Swiss Franc. Inflation has risen to 0.5% year-on-year, while growth appears to be steady at about 1%. As a result, direct intervention seems to be favored over cutting rates.

Looking at upcoming economic data, the first-time unemployment claims are projected at 215,000, slightly up from the previous 213,000. Continued claims are expected to hit 1.85 million. The Philadelphia Fed Index is anticipated to reveal a reading of 10.0, down from 16.3, and new home sales are expected to reach around 720,000, alongside a slight increase in wholesale inventory by 0.2%.

In pre-market trading, U.S. stocks are witnessing declines:

Dow Jones Industrial Average down by 178 points

S&P index down by 30.70 points

NASDAQ Index down by 147 points

If we take a look at the U.S. yield curve, it shows higher yields across the board:

2-year yield at 3.832%, an increase of 9.2 basis points

5-year yield at 3.918%, up by 5.9 basis points

10-year yield at 4.296%, up by 3.9 basis points

30-year yield at 4.900%, up by 2.0 basis points

In the precious metals market, gold prices are continuing to drop, which is somewhat surprising given ongoing global geopolitical tensions and a weaker dollar today. Gold has fallen by $185, or 3.4%, bringing it to $4,634.

Meanwhile, silver is down as well, dropping $5.80 or 7.7% to $69.57. Bitcoin is also feeling the pressure, falling below the $70,000 mark to trade at $69,784.