US equities gave back some ground overnight as traders reassessed Fed rate-cut expectations and turned their attention to key US inflation data and Nvidia earnings later this week. The Dow slipped 0.77% to 45,282, the S&P fell 0.43% to 6,439, and the Nasdaq eased 0.22% to 21,449.
The dollar clawed back most of Friday’s losses with the DXY jumping 0.73% to 98.43 as treasury yields pushed higher. The 2-year rose 2.5bp to 3.721% while the 10-year added 2.1bp to 4.275%. Oil prices pushed higher after strikes on Russian oilfields dampened hopes for a swift peace deal in Ukraine, Brent up 1.57% to $68.79 and WTI up 1.74% to $64.77. Gold was steady in recent ranges, easing 0.18% to $3,371.86 on the stronger greenback.
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Oil Volatility Here to Stay
Crude continues to see heavy two-way trade as the tug-of-war between geopolitics and fundamentals plays out. Early hopes of a ceasefire in Ukraine have quickly evaporated, with Trump’s proposed deal looking unlikely to suit either side. On the supply side, OPEC+ has been steadily rolling back production cuts, keeping downside pressure on the market, but inventory draws and geopolitical headlines have underpinned sharp rallies.
Medium term, any sign of a settlement in Ukraine combined with higher OPEC output and the end of the US summer driving season should see the balance tilt lower, but volatility looks set to remain a feature in the weeks ahead.
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Data Picks Up in the US Session
The macro calendar is busier in New York today after a slow start in Asia and London. Traders will keep an eye on the RBA minutes early in the session for signs of further cuts ahead, but it’s the US numbers that should drive market moves. Durable Goods (exp -3.8% m/m) and Core Durable Goods (exp +0.2% m/m) kick things off, followed by CB Consumer Confidence (exp 96.4) and the Richmond Fed Manufacturing Index (exp -11).
CAD traders will also be watching closely late in the day as BoC Governor Tiff Macklem speaks in Mexico, with the loonie primed for movement on any fresh policy hints.