Asia Pacific Market Open Talking Points
- US Dollar finds support as risk aversion and Fed rate cut bets cool
- The British Pound sunk after a dismal round of economic statistics
- APAC stocks may struggle rising, S&P 500 upside momentum fades
US Dollar Downtrend Pauses With US-Mexico Trade Tension Relief
The US and Canadian Dollars had a solid first day of the week as US-Mexico trade tensions cooled, as anticipated. Over the weekend, President Donald Trump announced that the nation will “indefinitely suspend” tariffs on Mexico, sending ripple effects in global benchmark stock indexes as sentiment generally recovered. Haven demand ebbed as US front-end government bond yields climbed.
Gains in the relatively high-yielding US Dollar, which has been battered by rising probabilities of a July Fed rate cut, helped it to outperform against the pro-risk Australian and New Zealand Dollars. Fed funds futures are now pricing in about a 78% chance of a cut from the US, down from 83% by the end of last Friday. While the S&P 500 gapped up and rose, it ended the day back near open (+0.47%) after some losses.
Meanwhile, the British Pound fell, particularly earlier in the day following a set of dismal economic