US equities rally, dollar and yields surge on data and hawkish Fed speak

US indices were firmly higher on Thursday with a Big Tech bias, with the Nasdaq outperforming , rallying 1.5%, lifted by the likes of Nvidia (NVDA), Amazon (AMZN), and particularly Netflix (NFLX), which saw near double-digit strength after a positive ad tier subscriber update.

Strong data releases (good news is good news now?) and a more hawkish than expected slew of Fed speakers were not enough to dampen market enthusiasm,  Jobless claims coming in at a less than expected 242k, down from 262k previously and Fed governors, Logan , Jefferson and Bullard all taking a stern tone regarding the Fed’s ongoing battle with inflation, Jerome Powell is scheduled to speak in Friday’s session so likely these members were laying the groundwork for  possibly more hawkish than expected comments from the Fed head today.

On this rate hike odds for the Fed’s June meeting jumped to 36% from 20% on Wednesday.

Source: CME Fedwatch

FX markets

USD rallied strongly with the Dollar Index hitting two-month highs on strong US data, hawkish Fed speak and a rally in bond yields. USD following yields and rate hike expectations almost tick for tick, suggesting the upside may be limited from here without an extra catalyst (debt ceiling?)

AUD and NZD saw losses against the greenback, with AUD particularly labouring after a weaker-than-expected employment change and rise in unemployment, to see AUD/USD hit a low of 0.6606 before finding some support near the bottom of its recent range.

Commodities

The Gold rout continued Thursday, with XAUUSD again pressured by rising yields, a strong USD and risk appetite returning to the market. XAUUSD crashed through the 1975 support level, not finding any buyers until it tested the April lows at 1952 USD an ounce.

In todays economic calendar there is little in the way of tier 1 releases, but both Fed chair Jerome Powell and a gaggle of ECB head Christine Lagarde are due to speak, with the recent hawkish tone from Fed governors, Jerome Powell’s comments  in particular could get the markets moving.

Charts Source : tradingview.com