Dollar Pauses, Markets Risk-On Despite Remaining High Oil Prices
The US dollar weakened for the first time in four days on Monday, halting a three-session rally. The dollar's weakening coincided with a recovery in risk appetite, reflected in strengthening US stock futures contracts despite persistently high oil prices.
S&P 500 futures rose around 0.5%, and Nasdaq futures also rose by a similar amount. In energy commodities, WTI held just below $100 per barrel, while Brent rose near $105, indicating that geopolitical premiums remained intact.
In the G-10 foreign exchange market, the Australian dollar and New Zealand dollar led gains, in line with improving global risk sentiment. The 10-year US Treasury yield edged down 1 basis point to 4.27%, giving riskier currencies room to strengthen and pressuring the greenback.
The yen gained modestly against the dollar after Japanese official Katayama reiterated a warning that authorities were ready to take "decisive" action in the foreign exchange market if necessary. This tone kept market participants wary of potential intervention, especially as volatility increased.
In Asia, Hong Kong stocks rallied, while mainland Chinese stock indexes pared losses following the release of stronger-than-expected Chinese activity data. Industrial output grew 6.3% (5.3% expected), retail sales 2.8% (2.5% expected), and fixed asset investment 1.8% (-5.1% expected), despite the unemployment rate rising to 5.3% (5.1% expected). China's 30-year bond yield also headed for its highest close since 2024, further highlighting global interest rate dynamics.
Market focus remains on geopolitics and its implications for inflation. Numerous headlines related to the Iran conflict, including US President Donald Trump's statement that left allies and adversaries alike guessing about the outcome of the conflict, and his threat to postpone a meeting with Chinese President Xi Jinping if Beijing does not help open the Hormuz Passage, have kept uncertainty high.
In other assets, gold remained stuck around the $5,000 per ounce area, while Bitcoin rallied around 3% to approach $74,000. Going forward, the dollar's direction will likely be determined by a combination of risk-on/risk-off sentiment, oil price resilience, US yield movements, and developments in central bank policies and communications, including those from the Fed and Japan's intervention warnings. (asd)
Source: Newsmaker.id
