Markets not getting too carried away just yet to start the new week | investingLive

Fed chair Powell’s dovish tilt saw the dollar sold off on Friday while stocks ripped higher. Meanwhile, gold also shot up a bit while Treasury yields dropped in the aftermath to close out last week. So far today though, the market reaction is more controlled with not much of a follow through to the moves at the end of last week.

The dollar continues to struggle but at least is not hitting new lows so far today. EUR/USD continues to hover near 1.1700 with large option expiries in play while USD/JPY is seen bouncing back a touch to 147.30 levels currently. The high earlier touched 147.52 but was limited by the 200-hour moving average near 147.53 at the time.

Meanwhile, US futures are settling down after the stronger gains on Friday. S&P 500 futures are marginally lower by 0.1%, so I wouldn’t look much into it as we take a bit of a breather before Wall Street returns later.

As a reminder, it is a UK holiday today in conjunction with the summer bank holiday. So, that should keep things quieter in the session ahead before we get the ball rolling again in US trading.

Do be aware that Fed funds futures are pricing in ~87% odds of a 25 bps rate cut still for now. So, it’s not to say that markets have gotten really carried away after Powell’s remarks to take the September decision as a given. Although, with odds like that it more or less is barring another twist in the tale from the US jobs report on 5 September.