Stock markets took a hit once again in the New York session as another strong data print out of the US gave more credence to the ‘stronger for longer’ opinion on US rates that is permeating the market. Core PCE Price Index numbers, well known as the Fed’s preferred inflation measure, came in 0.2% stronger than expected and the market reacted in typical fashion. The Dow and S&P dropped just over 1% with the Nasdaq closes to 1.7% in the red, Treasury yields jumped and the dollar continued to grind higher, the index finishing up 0.65%.
Investor focus remains solidly on the US and recent data prints have all come out north of market expectation leaving the Fed with little option but to keep their foot on the pedal in terms of rate hikes as they battle against inflation. Major currency pairs are starting to break into fresh ranges with the Euro, Yen and Sterling all looking vulnerable if the dollar continues to drive ahead in the coming trading sessions. Gold is also starting to look tired with the shiny metal losing its luster in favour of the safer greenback.
Looking ahead at today’s trading sessions and there is little in the way of data releases to act as fresh catalysts to move the market. Expect Asian bourses to start the day on the back foot after the US markets bearish close on Friday. Currency traders will continue to look for buying opportunities for the dollar in the sessions ahead until we see a sold change in the underlying fundamentals.