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06/03/2024 - 09:12 UTCThe dollar traded almost unchanged against most major currencies on Tuesday, with the dollar index (USDX) ending the day 0.05% lower, following the release of data showing that U.S. services industry growth slowed a bit in February amid a decline in employment, according to the Institute for Supply Management (ISM). Separately, data showed new orders for U.S.-manufactured goods dropped more than expected in January.
Despite weakness shown in US fundamentals, the CME Fedwatch tool indicates that the possibility for the first rate cut in 2024 to take place in the June FOMC meeting remains elevated at 57.3%.
On the cryptos front, the top two cryptocurrencies by market capitalization, Bitcoin and Ethereum, both posted sharp declines of 6.69% and 2.12% respectively on Tuesday, following recently reached multi-year highs, with the overall market capitalization currently standing close to 2.64 trillion dollars.
Wall Street momentum weakened on Tuesday, with all three main stock indices deviating further away from recent record highs as investors brace for a busy week that includes a European Central Bank rate decision, congressional testimony from Federal Reserve Chair Jerome Powell and U.S. jobs data. Expectations are that Powell could repeat the Fed’s intention to wait for more data before it proceeds with any rate cuts, when he testifies to Congress about inflation and the economy on Wednesday and Thursday.
In company news, several key market players will announce their Q4 earnings reports this week, among which are JD.com, INOVIO, Bilibili, Kroger, Broadcom, DocuSign, MongoDB, Costco and Oracle.
On Tuesday all fifteen U.S. states voted on the Presidential Primaries, with President Joe Biden and former President Donald Trump taking big steps toward making their rematch official, as both notched huge numbers. Official results will be periodically updated in the coming days.
Other key events that could determine price action this week include the ADP employment data, JOLTS Job Openings, a monetary policy decision by the ECB, Non-Farm Payrolls and the U.S. unemployment rate.
EUR/USD drove into a fresh intraday high on Tuesday but flopped back and ended the session with minor gains of 0.02% after the market readjusted following a worse-than-expected print in the US ISM Services Purchasing Managers Index.
Europe’s final HCOB Composite PMI for February printed above expectations after finding additional calculation gains over the preliminary print. However, the European PPI failed to recover as markets had expected.
Tuesday’s US PMI missed expectations, and markets will be pivoting to keep an eye out for key US labor figures and a two-day appearance from Federal Reserve (Fed) Chair Jerome Powell.
Gold scaled a record high on Tuesday, moving further above $2,100 per ounce in a rally sparked by growing bets for a U.S. interest rate cut in June and on safe-haven demand due to the conflict in the Middle East.
Gold, often used as a safe store of value during times of political and financial uncertainty, has climbed over $300 dollars since the start of the Israel-Hamas war.
Fed Chair Jerome Powell's congressional testimony on Wednesday and Thursday will be closely watched for more clarity on the U.S. interest rate path.
Oil prices settled lower, as China-led worries about weaker crude demand continued to linger despite the world's largest crude importer unveiling ambitious growth plan.
China set a gross domestic product target of 5% for 2024, the same as the prior year. Weak private purchasing managers' index data released on Tuesday further dented sentiment.
Concerns over China and the uncertainty over the path of U.S. interest rates, have factored into anxiety over weaker oil demand so far this year.
U.S. crude stockpiles increased less than expected, the API reported Tuesday, pointing to a pick-up in demand following weeks of much stronger-than-expected increases. The official government inventory report due Wednesday is expected to show weekly U.S. crude supplies increased by about 2.6M barrels last week.
Wall Street three major indexes retreated on Tuesday, with weakness in megacap growth companies such as Apple Inc and the chip sector weighing most on the US Tech 100ahead of this week's crop of economic data and remarks from Federal Reserve Chair Jerome Powell. US 500 ended the session 0.83% lower with US 30 and US Tech 100 posting losses of 0.89% and 1.43% respectively.
Tuesday's economic data was a mixed bag showing slower U.S. services industry growth in February as employment declined while a measure of new orders grew to a six-month high.
On the earnings front, Target shares rallied 12% after the retailer forecast annual comparable sales largely above estimates.
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