Dollar Declines, Stock Futures Divergent, Yields Ease

The U.S. dollar has weakened after rising the previous day, with Treasury yields falling as the bond market reopens following the Columbus Day holiday. Crude oil is also retreating from its recent highs, although Middle East headlines continue to keep traders vigilant.

Equity markets are showing a split. Dow futures point to a solid gain, while the Nasdaq is under pressure following sharp overnight losses in Asian semiconductor stocks. The earnings season has begun, with the first major bank and healthcare reports delivering a combination of beats and misses.

For market participants, the question is whether today's dollar pullback can develop into a larger move. A rebound against the dollar is a starting point. Holding support and breaking the next resistance levels would give that move more credibility.

The dollar is lower across the major currencies.

The greenback is declining against all seven major currencies, with its largest decline against the New Zealand dollar.

From the dollar's perspective:

• Against the NZD: down approximately 0.43%, with NZDUSD at 0.5610.

• Against the EUR: down approximately 0.30%, with EURUSD at 1.1187.

• Against the JPY: down approximately 0.30%, with USDJPY at 158.13.

• Against the CHF: down approximately 0.25%, with USDCHF at 0.8323.

• Against the GBP: down approximately 0.24%, with GBPUSD at 1.3238.

• Against the AUD: down approximately 0.22%, with AUDUSD at 0.6974.

• Against the CAD: down approximately 0.21%, with USDCAD at 1.4252.

The direction is consistent across the board. The next test is whether those gains against the dollar can hold through the North American session.

U.S. stocks: Dow higher, Nasdaq lower.

At 8:12 AM ET, U.S. stock futures indicated a mixed market, with funds flowing into industrials while riskier Nasdaq stocks declined:

• Dow industrial average: up 393 points.

• S&P 500: down 5 points.

• Nasdaq 100: down 254 points.

The divergence is clear. The Dow is pointing higher, while technology remains under pressure. Earnings and company outlooks will help determine whether that split continues after the opening bell.

Earnings: Beats and misses.

The US earnings season is kicking off today with traditional financials leading the way. Goldman Sachs, JPMorgan Chase, and Wells Fargo have released results, along with Johnson & Johnson and UnitedHealth:

• Goldman Sachs — beat earnings and revenue. EPS of $17.01 exceeded $13.07 expected. Revenue of $18.7 billion topped the $16.84 billion estimate.

• JPMorgan Chase — missed earnings and revenue. Reported EPS of $5.57 fell short of $5.93 expected. Revenue of $50.2 billion missed the $51.23 billion estimate. However, the bank raised its full-year net interest income outlook to $106.2 billion, above both the previous $105.5 billion guidance and the $105.28 billion estimate.

• Wells Fargo — beat earnings, missed revenue and net interest income. EPS of $1.87 topped $1.85 expected. Revenue of $21.9 billion missed the $22.31 billion estimate, while net interest income of $12.5 billion fell short of $12.7 billion expected.

• Johnson & Johnson — missed adjusted earnings; revenue was slightly above forecast. Adjusted EPS of $2.59 missed the feed’s $2.67 estimate. Revenue of $25.4 billion was just above $25.38 billion expected. The company raised its full-year adjusted EPS guidance to $11.05–$11.15, from $10.96–$11.11.

• UnitedHealth — beat earnings and revenue, with guidance above expectations. Adjusted EPS of $4.69 exceeded $4.12 expected. Revenue of $112.7 billion topped $111.31 billion expected. Full-year adjusted EPS is now projected at at least $20.50, versus $19.80 expected.

The lesson for traders is to look beyond the headline EPS number. Revenue, lending income, and forward guidance can change how investors interpret a beat or a miss.

Korean chipmakers lead a sharp selloff.

• South Korea’s Kospi fell 5.46%.

The selling centered on the country’s semiconductor heavyweights:

• Samsung Electronics: down approximately 7.4%.

• SK Hynix: down approximately 10.1%.

Reports of advances at Chinese memory-chip producer CXMT raised concerns about competition for Samsung, SK Hynix, and Micron. That added to broader unease over the AI investment boom. The Kospi recovered some ground after falling more than 7% intraday.

For the chipmakers, the concern is what increased competition could mean for pricing power and profit margins. Strong demand can continue, but investors also need confidence that the companies can maintain the earnings that support their valuations.

Treasury yields move lower.

U.S. Treasury yields are lower as cash bond trading resumes:

• 2-year: 4.770%, down approximately 2.1 basis points.

• 5-year: 4.974%, down approximately 4.7 basis points.

• 10-year: 5.187%, down approximately 5.7 basis points.

• 30-year: 5.551%, down approximately 5.4 basis points.

The pullback in yields accompanies the softer dollar, but the 10-year remains above 5%. Tomorrow’s inflation report will be an important test of whether yields can continue to ease.

Fed commentary: AI spending and inflation.

Austan, president of the Chicago Fed, warned that inflation remains too high and that AI-related demand may be spreading price pressures beyond data centers and their immediate suppliers. He described employment and consumer spending as solid, while expressing concern about broader overheating demand.

Christopher, a Fed governor, said the U.S. remains dominant in building AI models and that hyperscalers still plan substantial investment over the next three years. He also said higher yields could do some of the Fed’s work by restraining demand.

The policy question is whether AI investment raises productive capacity quickly enough to offset the demand and cost pressures created during the buildout.

RBA minutes keep further hikes on the table.

The RBA’s September meeting minutes showed unanimous agreement that a 25-basis-point hike was necessary, taking the cash rate to 4.60%.

The board was concerned that excess demand was greater than previously assumed and that inflation could remain elevated. Higher oil prices, domestic cost pressures, and signs of AI-related price pressures were among the concerns. The RBA reiterated that it would raise rates further if needed.

There is also evidence of strain. Australian business confidence fell to -13 in September, while business conditions held at -1. That leaves the RBA balancing weak confidence against persistent inflation pressures.

Oil and the Middle East remain key drivers.

Oil is lower this morning, but the underlying geopolitical risks remain. Saudi Arabia has vowed a response to Houthi attacks, while U.S.-Iran negotiations remain stalled. Russian strikes on Ukrainian energy infrastructure have added another source of uncertainty.

Saudi Arabia is also examining ways to increase its ability to move crude through pipelines. Converting a gas pipeline could add approximately 1.2 million barrels per day of capacity within seven to eight weeks, according to the Saudi energy minister. That could ease some transport concerns, although execution and security risks remain.

For markets, oil matters through the inflation channel. Renewed gains could keep pressure on yields and rate expectations. A sustained retreat would ease some of that pressure.

The calendar: Fed speakers today, CPI tomorrow.

Today’s scheduled events include:

• 8:00 AM ET: OPEC’s monthly oil market report.

• 10:00 AM ET: Austan, president of the Chicago Fed, speaks.

• 1:00 PM ET: Tom Barkin, president of the Richmond Fed, speaks.

• 4:00 PM ET: Susan Collins, president of the Boston Fed, speaks.

The bigger scheduled economic risk is Wednesday’s U.S. CPI report, with PPI and retail sales also ahead this week. Those reports will help traders assess inflation pressures and the strength of consumer demand.

EURUSD: Buyers try to extend the rebound.

EURUSD is trading near 1.1187, toward the upper end of its 1.1154–1.1196 session range. The gains come after the pair moved to new lows for the year yesterday in holiday trading.

The session high at 1.1196 is the immediate upside reference and is also near its 100-hour MA at 1.1193 currently. A break above it, followed by an ability to stay above, would give the rebound more momentum with the 200-hour MA at 1.1216 the next key target to get to and through.

On the downside, 1.1154 is the session’s lower boundary. Buyers need to show they can hold higher levels rather than allow the rebound to unwind.

USDJPY: Sellers press toward the session low.

USDJPY is trading near 158.13, below the session high at 158.66 and closer to the low at 157.84.

A break below 157.84 would extend the session’s dollar weakness. Failure to break and hold below that level would leave room for a rebound within the range.

The session high at 158.66 remains the upper reference for today’s trading.

GBPUSD: Buyers approach the session high.

GBPUSD is trading near 1.3238, just below the session high at 1.3246.

A move above 1.3246 would open the door to a range extension. The buyers would then need to hold that break to show they have more control.

The session low at 1.3205 defines the lower boundary. A reversal toward that level would weaken the recovery.