US stocks roar back with Nasdaq 100 hitting new highs. The US dollar plunges to a three-year low on dovish Fed expectations. Asian markets show mixed risk-on.
Risk-on prevails, US dollar weakness persists, gold extends losses
US stock market bulls roared back to life on Thursday, 26 June, led by the mega-cap tech-heavy Nasdaq 100, which climbed 0.9% and surged to another fresh all-time intraday and closing high.
The S&P 500 advanced by 0.8% to close at 6,14, a whisker away from an all-time intraday high of 6,147 printed in February. Additionally, the Dow Jones Industrial Average rose by 0.9%, and the Russell 2000, a measure of small caps, surged by 1.7%.
Despite facing a “wall of worry” from softer US economic growth, and trade tariffs uncertainties as the 9 July expiration date of higher global reciprocal tariffs rates (excluding China) looms, market participants choose to focus on the potential additional liquidity provided by a more dovish US Federal Reserve starting in the third quarter.
In today’s Asia session, risk-on behaviour has continued to persist as the S&P 500 and Nasdaq 100 E-mini futures added intraday gains of 0.2%. Japan’s Nikkei 225 has continued its bullish streak after yesterday’s bullish breakout from its 7-week range, adding 1.2% to hit a five-month high. Singapore’s Straits Times Index rallied by 0.6%, on track to complete its fourth consecutive session of winning streak, while Hong Kong’s Hang Seng Index underperformed with an intraday loss of -0.4%.
The latest US continuing jobless claims increased to 1,974 thousand in the week ending 14 June, the highest level since November 2021, which suggests more people are staying out of work for longer.
The elevated level of continuing claims aligns with other surveys and data pointing to a slowdown in the US labour market, which may force the Fed to abandon “its wait and see” approach as proclaimed recently by the US Fed Chair Powell in his testimony to Congress and bring forward the expected interest rate cuts.
Currently, Fed funds futures data, as measured by the CME FedWatch tool, indicates market expectations for three 25-basis-point rate cuts by December 2025, which would bring the Fed funds rate down to 3.50%–3.75% from the current 4.25%–4.50% range. This marks an increase from last week’s pricing, which had only two rate cuts priced in, aligning with the Fed’s latest 2025 dot plot, where officials projected just two rate cuts.
The latest increase in dovish expectations of the Fed, as seen in the Fed funds futures market, has also reinforced the ongoing weakness seen in the US dollar. The US Dollar Index extended its losses for the fourth consecutive session with a daily loss of -0.4% on Thursday to close at 97.35, a three-year low, and breaking below a key major support of 97.40, where a weekly close below it may trigger a multi-week to multi-month US dollar weakness.
The euro and sterling have continued to add to their respective gains and surged to their highest levels since 2021. The Swiss franc appreciated to a decade high against the US dollar as the USD/CHF broke below a key support of 0.8040, the 21 April 2025 low, to hit an intraday low of 0.7979 yesterday, the lowest recorded level since the removal of the EURCHF floor in 2015.
In today’s Asia session, the Japanese yen has failed to weaken despite a slowdown in June's Tokyo core CPI (actual: 3.1% y/y, May: 3.6%, consensus: 3.3%) and May’s retail sales (actual: 2.2% y/y, Apr: 3.5%, consensus: 2.7%), the USD/JPY has reversed down from its early intraday gains and traded almost unchanged at 144.43 at this time of writing as market awaits for the release of US PCE inflation data later in the US session.
The strong risk-on sentiment seen in the past two days has reduced safe-haven demand, which led to a rotation out of Gold (XAU/USD) at least in the short term. The yellow metal has broken below the US$3,300 intermediate support and its 50-day moving average. So far, it has recorded an intraday loss of -1% and extended its decline to hit a four-week low at US$3,295.
Our YouTube video above contains the latest intraday technical analysis on the latest intraday technical analysis on US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil.
