Tech stocks dragged Wall Street lower overnight, with heavy selling in big-cap names led by Nvidia, as traders positioned ahead of key Federal Reserve risk events later this week.
The Dow Jones bucked the trend, holding firm and finishing flat at 44,922 (+0.02%). The broader market struggled, however, with the S&P 500 down 0.59% to 6,411 and the Nasdaq shedding 1.46% to 21,314.
The shift highlights investor caution, with equity traders dialing back risk exposure as they await clarity on the Fed’s next steps.
Dollar Gains, Yields Ease into Fed Minutes
The US dollar extended gains against the majors, with the DXY up 0.11% to 98.15, reflecting safe-haven demand. At the same time, Treasury yields softened into tonight’s release of the Fed meeting minutes. The 2-year yield dipped 1.5bps to 3.748%, while the 10-year fell 2.7bps to 4.306%, suggesting bond markets are bracing for dovish signals.
Commodities came under pressure. Oil prices fell sharply on speculation of easing Russian sanctions: Brent crude slipped 0.93% to $65.94 and WTI dropped 1.43% to $62.51. Gold also weakened, down 0.51% at $3,315.78, weighed by a firmer dollar and improved risk sentiment.
Sterling in Focus with UK CPI Due
All eyes in early European trade turn to the UK inflation release. Price growth has proven sticky, keeping pressure on the Bank of England, even as the labor market cools. Policymakers will be hoping for signs of relief.
The market consensus is for headline year-on-year CPI to edge up to 3.7% (+0.1%). A stronger reading could stall the BoE’s easing bias and underpin sterling, while a softer print may ease inflation concerns and trigger a sharp sell-off in GBP.
Cable remains mid-range for now, but the release could provide the breakout catalyst traders have been waiting for.
Busy Calendar for Global Markets
It’s a packed session across global markets:
- Asia: Focus starts with China’s Loan Prime Rate, expected to stay unchanged at 3.00% (1-year) and 3.50% (5-year). Traders also await the RBNZ decision, where another 25bps cut is widely anticipated.
- Europe: UK CPI dominates early trade, with the 3.7% y/y print seen as the key risk driver.
- US: A lighter calendar, featuring weekly crude oil inventories (exp. -0.8mio). The highlight comes from FOMC minutes and commentary from Fed officials Waller and Bostic, which could reshape rate expectations.
With central banks and inflation data in focus, volatility is likely to remain elevated across FX, commodities, and equities.
✍️ Written by Spec FX — delivering timely insights for global markets.