Daily Market Pulse
Global Markets Under Pressure as U.S. Dollar Strengthens Amid Rate Cut Speculation
2 minute readGlobal financial markets are under pressure as we kick off the week, with both equities and bond markets showing weakness. This dynamic has bolstered the U.S. dollar, which is starting the week on firmer footing. Key highlights include:
Market Overview
- U.S. Dollar Strength: Friday's strong U.S. jobs report has led traders to sharply reduce bets on Federal Reserve rate cuts in 2025, with expectations now pricing in less than 30 basis points of easing for the year. This has pushed the benchmark rate underpinning global capital costs to a 14-month high, rising more than 15 basis points in early trading today.
- Volatility in Sterling: Increased uncertainty is driving significant swings in GBP/USD, while EUR/USD remains subdued.
- Canadian Dollar Resilience: Against the trend of a strong U.S. dollar, the Canadian dollar is appreciating, aided by a rally in Brent crude prices, which are at a five-month high.
Currency Highlights
- EUR/USD (-0.2%): The euro remains under pressure amid a stronger dollar. Market participants are eyeing U.S. inflation data due Tuesday (PPI) and Wednesday (CPI) for further cues, but no major deviations from the previous month's figures are expected.
- GBP/USD (-0.45%): Sterling, which had been down as much as 0.8% in early trading, has rebounded modestly. Elevated volatility in the pair reflects broader uncertainty surrounding interest rate expectations and global risk sentiment.
- USD/CAD (-0.18%): The Canadian dollar is bucking the trend, appreciating against the U.S. dollar. The move is loosely tied to the strength in oil markets, with Brent crude futures reaching a five-month high, offering support to the commodity-linked currency.
Looking Ahead
Markets are poised for a data-heavy week, with U.S. PPI on Tuesday and CPI on Wednesday likely to influence dollar positioning further. While no significant surprises are anticipated, any deviation could spark renewed volatility. For now, Friday's robust jobs data has tempered expectations of immediate Fed rate cuts, reinforcing the dollar's current strength.
