Marketwatch North America

Daily Insights
March 5, 2024

The dollar is higher in trading today following Atlanta Feb President Bostic’s hawkish comments yesterday. Bostic’s statement that the ‘pent-up exuberance’ for rate cuts (invoking the bygone era of Chairman Greenspan’s Irrational Exuberance) heightened the risk for a surge in inflation. To counter this Bostic suggested that rate cuts (once started) will not be back-to-back. Markets have already priced out three of the seven rate cuts originally expected this year, and after Bostic’s comments traders are wondering if they need to price out even more.

Some are viewing Bostic’s comments as a coordinated strategy by the Fed to prepare markets for Fed Chairman Powell’s scheduled testimony to Congress which begins tomorrow. Powell is expected to strike the same hawkish tone, doubling down on the Fed’s ‘patient’ approach to cutting rates.

The renewed hawkish tone has lifted the dollar (higher rates for longer is reason itself to hold dollars) but lowered treasury yields, one of the rare times the dollar and yields trade in different directions. Yields are lower in all tenors, with the long-term tenors bearing the brunt of the selloff: 20yr, 25yr, and 30yr are -0.06%.

Hawkish Fed comments have sparked a ‘risk off’ shift in risk assets, leading to losses the major U.S. equity indexes and driving the U.S. dollar lower vs. the Mexican peso.

Today’s economic data includes Factory Orders (est. -2.9%) and Durable Goods (est. -6.1%).

Oil prices reached the highest point of the year on Friday at $80.85/barrel but have retreated to $78.30/barrel today. Oil is +9.35% and gasoline is +21.41% YTD. Resurgent inflation compounded by higher gas prices has consumers feeling the decreased purchasing power of their wages.

Gold reached a record high today at $2,141.59/oz.

Economic Calendar

JPY - BOJ Gov Ueda Speaks
NZD - ANZ Commodity Prices m/m
USD - Final Services PMI
GBP - BRC Retail Sales Monitor y/y
USD - ISM Services PMI
AUD - Current Account
USD - Factory Orders m/m
CNY - Caixin Services PMI
USD - RCM/TIPP Economic Optimism
JPY - 10-y Bond Auction
USD - FOMC Member Barr Speaks
EUR - French Industrial Production m/m
EUR - Spanish Services PMI
EUR - Italian Services PMI
EUR - French Final Services PMI
EUR - German Final Services PMI
EUR - Final Services PMI
GBP - Final Services PMI
EUR - PPI m/m
NZD - GDT Price Index

Market Indicators

Currency Pairs
Pair High Low
usd/jpy 150.545 150.054
eur/usd 1.08557 1.08413
gbp/usd 1.26709 14
aud/usd 0.65111 0.64773
usd/cad 1.3605 1.35712
eur/gbp 0.85605 0.8546
usd/mxn 16.9799 16.9421
Equities and Commodities
S&P 500 5109.3
NASDAQ 18106.3
DOW 38831.6
GOLD 2130.98

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.