Dollar Rebounds as Yields Tick Higher Ahead of Fed Meeting

USD

The dollar index which measures the greenback against a basket of major currencies rebounded significantly during the early trading hours of the day heading towards a one-week high of 91.12. The move was supported by a break high in US Treasury yields, where the US 10-year yields rallied to a two-week high of 1.65%. Market participants are looking forward to the Federal Reserve monetary policy meeting which will end later on the day. There are no expectations for any policy changes, however, we are waiting for Powell's response on tapering questions when using the Bank of Canada as an example. The USDJPY soared to 109.07, the EURUSD dipped to $1.2056, and the GBPUSD slipped to $1.3862.

Equities

Major US stock index futures drifted lower following yesterday's close as Treasury yields inched higher ahead of the Federal Reserve monetary policy meeting. At a time, when yields were moving higher, investors started looking into valuations, and tech stocks tumbled sharply. Any possible clues from the Federal Reserve over tapering could push yields higher and weigh on stocks, especially tech stocks. On the other hand, the earnings season continues with companies reporting solid figures for Q1. Apple and Facebook will publish their numbers after today's close. The Dow Jones Industrial Average futures continued to trade in a tight range near 33900, the S&P500 futures hovered near an all-time high at 4184, while Nasdaq futures plunged to 13902.

Metals

Precious metals prices fell as the dollar recovered along with Treasury yields. The price of a gold ounce declined to a one-week low of $1766, the price of a silver ounce dipped to $25.90, and palladium dropped to $2922.

Oil

Oil prices extended upside rally as OPEC and its allies ensure a solid recovery in oil demand levels, and move forward with plans of increasing output. On the other hand, the coronavirus cases in Japan and India are sort of worry for investors, and it could weigh on prices or cap the upside move for some time. The American Petroleum Institute reported a buildup of 4.319 million in crude oil stocks, while the official figures will be published later today by the US Energy Information Administration. The West Texas Intermediate crude June contract rose to $63.27, and the Brent blend June contract hovered near $66.50.

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