The Dollar Remains on the Defensive
Last week’s cyberattack on the largest US gasoline pipeline continues to lift oil and gasoline prices. The June gasoline futures gapped higher to extend last week’s 2.4% but has subsequently moved lower to enter the gap. June WTI is firm and holding above $65. The supply disruption is key, but iron ore prices soared 10% on strong Chinese demand.
More broadly, the CRB Index settled last week at six-year highs. Led by South Korea, Asia Pacific equities markets moved higher, and Australia’s ASX rose to a new record high.
Europe’s Dow Jones Stoxx 600 is up fractionally but sufficient to also set a new record high. US futures are narrowly mixed, with the NASDAQ trailing.
The US 10-year yield recovered smartly after the sharp and quick drop on the back of the weak jobs data. It is steady today near 1.58%. European yields are narrowly mixed. The UK Gilt yield is up a couple of basis points, while Australia and New Zealand saw their 10-year yield rose three basis points.
The dollar is mostly softer. Sterling and the dollar bloc are leading the majors, while the yen is softer. The South Korean won is leading emerging market currencies higher. The eastern and central European currencies are laggards, though the Hungarian forint is more resilient. The JP Morgan Emerging Market Currency Index is advancing for the fourth consecutive session. Last week’s 1.7% gain was the most since last November.
Gold is firm but below the pre-weekend high (~$1843.50). The yellow metal may be pausing ahead other $1850 area, which is where the 200-day moving average is found.
Bannockburn Global Forex