The U.S. dollar took a breather on Thursday, slightly retracing from recent gains against most major peers, with the dollar index (USDX) ending the day lower by around 0.20%. Against emerging market currencies, the dollar painted a mixed picture with pairs like the USD/CNH and USD/INR pushing even higher while USD/TRY and USD/ZAR ended the day in the negative.
A move by Japanese monetary authorities to intervene in the foreign exchange market for the first time since 1998, gave a significant boost to the yen. This followed a monetary policy decision by BOJ that kept rates unchanged. The move triggered the biggest one-day decline for the dollar against the yen since March of 2020, to peg the pairing at 142.31.
Sentiment in the crypto markets remains overall negative with the global cryptocurrency market cap close to $0.92T, down by almost -0.77% over the last day, according to CoinMarketCap data. As at 06:00 PM GMT on Thursday, the Bitcoin was trading right below the $19K mark while Ethereum was trading close to $1280.
The main stock indices in both Europe and the US extended their slide on Thursday, while the U.S. 10-year yield hit 3.68%, the highest since February 2011.
On Friday, Flash Manufacturing PMI and Flash Services PMI reports are due from France, Germany, the UK and the US while Canada will publish monthly retail sales and core retail sales data. Later in the day, markets’ attention could be shifted towards a speech by Fed chairman Jerome Powell that is to be held Washington DC where investors will possibly be watching closely for further hawkish remarks.
Major stock market indices like the US 500, the US 30 and the US tech 100 posted a third consecutive daily loss on Thursday, as the impact of the Fed’s hawkish stance still seems to be weighing on the markets.
Losses were driven mainly by technology and financial stocks, as investors appear worried that the Federal Reserve’s aggressive approach to rein in inflation could trigger a recession.
Shares of the biggest technology and growth companies by market cap, such as Apple Inc, Amazon.com Inc, Tesla Inc and Nvidia Corp fell between 1% and 6% while benchmark U.S. Treasury yields hit an 11-year high. Rising yields weigh particularly on valuations of companies in the technology sector, which have high expected future earnings and form a significant part of the S&P 500.
According to several market analysts, rate cuts are expected to begin only in 2024 while inflation is expected to stay well above the Fed’s 2% target for at least the next two years.