The United States dollar shot up again, reaching a three-month high against a range of major world currencies.
Financial Analysts think this trend would likely continue, fueled by the U.S. economy’s resilience against a struggling Eurozone.
The economic data on jobs and PCE inflation this week isn’t expected to change the outlook. The DXY dollar index also peaked at 104.573.
Iran confirmed that its oil sector is stable despite recent Israeli conflict. That eased tensions as global markets get ready for a busy week with key economic data and major corporate earnings.
Among the anticipated data are results from the “Magnificent Seven” tech giants, U.S. and eurozone economic growth reports, and a monthly payroll report.
On Wall Street, equity futures indicated a potential rebound after the S&P 500 recorded its first weekly decline in seven weeks.
Airlines benefited as lower oil prices suggested reduced fuel costs, while energy stocks faced declines. Boeing also fell in pre-market trading, following reports on its capital-raising plans.
For the U.S. bond market, facing its worst six-month selloff, this week is critical as it awaits the Treasury Department’s announcement on its debt sale plans. The 10-year Treasury yield rose by two basis points, while the dollar held steady.
European stocks inched higher, led by luxury brands LVMH and Hermès, while major energy firms like Shell, TotalEnergies, and BP dragged the index down.
Among individual stocks in Europe, Sonova Holding AG shares climbed over 5% after Zurcher Kantonalbank announced Costco would resume selling Sonova’s Sennheiser hearing aids.
Royal Philips NV shares plummeted 17% following a downgrade in its sales outlook, and Porsche AG dropped after disappointing earnings results. In the U.K., the FTSE 100 fell as Prime Minister Keir Starmer vowed to implement fiscal austerity through tax hikes and extra borrowing.
The Chinese yen saw its steepest drop in three months against the dollar after Japanese Prime Minister Shigeru Ishiba’s snap election gamble backfired. The dip gave the export-heavy Topix index a 1.8% boost.
The U.S. economy is outpacing other developed economies, thanks to a wave of investments fueling productivity and wages. The International Monetary Fund (IMF) recently updated its growth projections, raising the outlook for both the U.S. and the global economy, with a stronger focus on the former.
The IMF projects U.S. GDP to expand by 2.5% in the fourth quarter compared to a year earlier, marking a half-percentage point increase from July.
The U.S. economy grew 3.2% in 2023, setting it on track to outpace other Group of Seven nations.
Global GDP is now expected to grow by 3.3% this year, slightly higher than previous estimates.
Advanced economies are projected to grow 1.9%, with the U.S. leading the pack. For 2025, the IMF forecasts 1.9% growth for the U.S., outpacing the projected 1.7% for advanced economies as a whole.
China’s economy, meanwhile, is expected to grow by 4.5% this year, a slight downgrade from prior estimates. Growth is expected to hit 4.7% by 2025, following a 5.4% expansion last year.
The eurozone is projected to grow by 1.2% this year and 1.3% next year, after a sluggish 0.2% growth rate last year.