From Marc to Market:
Overview: The dollar jumped yesterday on the back of rising rates as if despite the two dovish dissents by governors, yesterday's FOMC meeting was a hawkish hold. It seemed to us that Fed Chair Powell referred to downside risks more than upside risks. The dollar's pullback today has been limited, and the consolidation looks more like the breath that refreshes rather than the end of the short covering rally that began at the start of the month. President Trump announced a several new tariff schedules as the August 1 deadline looms. Note too that the arguments in the appeal case that challenge the legality of the reciprocal tariffs will be heard today. Despite stronger than expected economic data, the yen is the weakest in the G10. The BOJ stood pat as expected. The dollar is trading above the 200-day moving average for the first time since mid-February.
Outside of Japan and Taiwan, the large bourses in the Asia Pacific region fell, led by more than 1% drops in Hong Kong and China mainland. Disappointing PMI data appeared to weigh on activity. Europe's Stoxx 600 is nursing small losses, while strong earnings by Microsoft and Meta is helping lift US index futures. Nasdaq futures are trading about 1.3% higher and the S&P 500 futures are up almost 1%. Benchmark 10-year yields are 1-3 bp lower in Europe and the 10-year US Treasury yield is off nearly two basis points to around 4.35%. Gold has snapped back. It lost 1.5% yesterday, the most in a month, and is around 1% higher now to resurface above $3300. September WTI is consolidating after it reached a new high for the month yesterday near $70.50. It is near session lows (~$69.40) in late European morning turnover.
USD: The Dollar Index rally was extended to almost 100.00 yesterday, its best level since the end of May....
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