The dollar is sitting higher across the board as we get into European morning trade, with risk sentiment fairly on the softer side after another round of gains for equities yesterday. Wall Street finished with a flourish with the S&P 500 nearing the 4,000 mark as the technical break higher continues to extend:
But for now, futures are pointing to a drop of 19 points, or 0.5%, as we look towards the session ahead.
The ECB was the main event yesterday and the central bank somewhat surprised with a 50 bps rate hike but that wasn’t enough to help the euro find much of a rally. EUR/USD is down 0.4% to 1.0185 at the moment as the euro side of the equation fails to really convince and markets will now slowly shift the attention to the Fed next week.
All in all, the dollar is finding a footing after some softness at the start of the week. I mentioned earlier in the days before that the dollar should not weaken materially as even with the focus on the Fed maybe just hiking by 75 bps next week, it doesn’t change the fact that they are still one of the more aggressive central banks out there and are looking to bring rates towards the region of 3.50% to 4.00%.
Looking ahead today, PMI data will be in focus and that could stir up sentiment regarding recession risks depending on the numbers that we see so just be wary of that.