Greenback Falls With Treasury Yields as Nasdaq Futures Remain Soft

The greenback has fallen against most of the major currencies, with the Swiss franc posting the strongest advance. The Australian dollar is the outlier after a soft employment release.

Treasury yields have dropped sharply, yet the move has done little to ease the strain on technology shares. With Nasdaq futures still weak after the previous session's steep losses, the day ahead brings PPI, retail sales and jobless claims.

Morning Kickstart

Against most major currencies, the U.S. dollar is trading weaker as Treasury yields pull back. That decline in yields, however, has not sparked a broad recovery in equities. After the previous session's steep selloff, technology remains weak and Nasdaq futures are signaling another tough opening.

Traders therefore head into the North American session weighing opposing currents. Bonds are bouncing back, the dollar is softer and gold is firmer, yet stock traders are staying wary. The next gauge comes with PPI and retail sales: is inflation still running hot, and are consumers still spending?

Greenback broadly lower; aussie the exception

Among the seven major currencies, the dollar has declined against six:

• EURUSD is at 1.1212, having gained 0.50%.
• GBPUSD stands at 1.3251, up 0.45%.
• USDJPY trades at 157.90, 0.26% lower.
• USDCHF is at 0.8299, down 0.56%.
• USDCAD sits at 1.4200, off 0.25%.
• NZDUSD is at 0.5605, higher by 0.25%.
• AUDUSD is at 0.6914, down 0.79%.

The dollar's steepest fall of the group has come against the franc, while its biggest advance is against the Australian dollar.

The aussie's divergence traces to a domestic data point. Employment in September dropped by 39,300 against an anticipated 20,000 increase, and the jobless rate came in at 4.7%. The soft report put pressure on the Australian dollar even though the greenback was sliding elsewhere. investinglive.com

Intraday ranges: where do prices currently sit?

EURUSD and GBPUSD are in the upper parts of their daily ranges, whereas USDJPY, USDCHF and USDCAD are hovering closer to their lows. The overall picture reinforces the dollar-selling narrative.

Trading at its low for the session, AUDUSD indicates that sellers are still in control of the pair after the soft employment data.

For market participants, a level near the day's extreme becomes significant only if price can push through it and remain past it. If a breakout quickly reverses, that failure can open the door for the opposite side to press back.

U.S. equities: tech-led pressure persists

Futures on U.S. indexes are split, with the Dow trading higher while the wider benchmarks stay weak:

• Dow futures are 130 points higher.
• S&P 500 futures have lost 12.94 points.
• Nasdaq futures are down 354 points.

Broad market indexes suffered steep losses in the prior session, with AI and chip stocks among the hardest hit. Futures this morning imply that selling strain has not yet lifted.

Tech's overnight decline spilled into Asia as well, with semiconductor makers tracking Wall Street lower on worries about interest rates and how AI projects are being funded. investinglive.com

Europe's bourses are showing a mixed performance:

• Germany's DAX is 0.47% lower.
• France's CAC 40 has risen 0.21%.
• The UK's FTSE 100 is ahead 0.69%.
• Spain's IBEX is up 0.21%.
• Italy's FTSE MIB has fallen 0.72%.

Treasury yields are tumbling across the curve

Yields on U.S. government debt are lower at every maturity:

• The 2-year yield is 4.7488%, 5.32 basis points lower.
• The 5-year yield stands at 4.9061%, off 8.59 basis points.
• The 10-year yield is 5.0975%, down 9.25 basis points.
• The 30-year yield is 5.4352%, 8.88 basis points lower.

The yield slide is a key element behind the dollar's pullback. As U.S. yields fall, the incentive to hold dollars can weaken, though the upcoming data may swiftly alter that calculus.

The key split this morning is between a recovering bond market and technology shares that are still struggling. Declining yields by themselves have yet to lure buyers into the wider equity market.

Crude rises slightly; gold and silver bounce back

• WTI crude is at $95.35, a gain of $0.26, or 0.27%.
• Spot gold trades at $4,150.85, up $46.06, or 1.12%.
• Silver is at $56.71, higher by approximately 1.99%.
• Bitcoin is at $80,986, down $589, or 0.72%.

Gold is bouncing back in tandem with a softer dollar and falling Treasury yields. Bitcoin, in contrast, is staying weak in step with technology stocks.

Events in the Middle East are still muddying the crude outlook. Persistent tensions, among them Houthi strikes on Saudi targets and shipping disruptions, are cited by InvestingLive. In a separate development, Washington is reportedly weighing softer sanctions on shadow-fleet tankers in hopes of bringing freight costs down and easing Gulf crude flows. Those reports have traders weighing supply threats against steps to increase the flow of oil. investinglive.com

A heavy slate of data at 8:30 a.m. ET

Several possible market movers are set to hit at once in the North American session.

Prices at the producer level:

• Monthly headline PPI is seen at +0.5%, compared with +0.4% before.
• On a yearly basis, headline PPI is expected at 5.3%, versus 5.4% previously.
• PPI excluding food and energy is projected at +0.3% month over month after +0.2%.
• The annual core rate is expected at 4.4%, against 4.6%.

Monthly and annual figures tell different stories, and that gap is significant. A yearly rate can soften at the same time as the latest monthly number quickens. To judge whether underlying price pressure is genuinely lessening, traders have to go past the year-over-year headline.

Retail sales data:

• Total sales are forecast at +0.3%, after an upwardly revised +1.2%.
• Excluding autos, sales are expected at +0.5%, versus a revised +1.4%.

The earlier headline figure was lifted from 1.1%, and the ex-auto number from 1.3%.

Jobs data:

• Initial claims are expected at 200,000, compared with 197,000.
• Continuing claims are forecast at 1.710 million, versus 1.716 million.

Regional factory gauges:

• Empire State manufacturing is expected at 10.25, after 7.60.
• The Philadelphia Fed gauge is seen at 28.4, versus 37.8.

The overall mix is what counts. Solid spending combined with firm inflation could pose a challenge to the Treasury rally. A weaker spending print would instead raise questions about growth. The immediate reaction may hinge on one report, but the more lasting move will reflect how traders view the entire package.