Dollar Slides as Strong Data Bolster Risk Appetite

USD

The dollar index which measures the greenback against a basket of major currencies fell significantly during the early hours of the week despite thin trading to 92.54 amid enhanced risk appetite. The series of strong economic indicators among them the ISM manufacturing and non-manufacturing PMIs and the jobs reports fueled investors' appetite towards risk. Investors were seen fleeing the dollar towards riskier assets such as stocks, but the dollar could remain remarkably in a better situation than other major currencies as the US economy outperforms rival economies. The USDJPY hovered near 110.30, the EURUSD inched higher to $1.18, and the GBPUSD fluctuated near $1.39.

Equities

Major US stock index futures soared as strong data ensured a robust economic recovery. Most of the US economic indicators are beating estimates significantly, satisfying investors' thoughts about a fast and solid economic recovery. As long as the Federal Reserve and the Biden Administration are moving forward with monetary and fiscal stimulus, the downside risks to the economy would be in control, which could lead to more gains. The Dow Jones Industrial Average futures hovered near a record higher of 33450, the S&P500 futures rallied to record 4073, and Nasdaq futures jumped to 13620.

Metals

Precious metals prices held steady as investors favored riskier assets such as stocks, while also the US treasury yields remained at elevated levels post the strong economic releases. The price of a gold ounce held steady near $1730, the price of a silver ounce was almost unchanged near $24.90, while palladium inched higher to $2680.

Oil

Oil prices weakened as investors weigh the OPEC+ decision on adding supply as Europe extends the lockdown. Oversupply is the nightmare that oil producers are trying to avoid, but also, they want to sell more oil to pay for their budget expenses, which is making it a bit tricky. Oil prices would come under further pressure if the US production continues to recover, and top producers pump more oil, while the oil-demand recovery in Europe remains shy, and the outlook in Asia eases. The West Texas Intermediate crude May contract fell to $58.61, and the Brent blend June contract dipped to $62.04.

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