S&P 500: Futures stay mildly bid amid US dollar weakness, risk reset

S&P 500 Futures defies Friday’s halt to a four-day winning streak.
US dollar remains on the back foot amid rising virus numbers, fears of escalating US-China tension.
US data, American traders’ return and the qualitative catalysts will be in the spotlight.

Anil Panchal FXStreet

S&P 500 Futures print 0.60% gains while taking the bids to 3,147 during the initial hour of Tokyo open on Monday. The risk barometer shrugs off the coronavirus (COVID-19) updates from the US, as well as fears of escalating Sino-American tension, to kick-start the week on a positive note. In doing so, the equity derivative might be taking clues from the US dollar weakness and US President Donald Trump’s efforts to placate the bears.

Pandemic details from the world’s largest economy continue to disappoint global traders. The latest updates from Reuters suggest the cases of the deadly disease stayed above 50,000 per day, the record high, during the initial four days of July. It should also be noted that the epicenter Florida and Texas have halted economic reopening plans amid a worrisome increase in the hospitalization rates. Also, US aircrafts are heading to the controversial South China Sea for exercising amid Beijing’s drill, which in turn raises fears of further tension between the world’s top two economies. Even so, US President Donald Trump tweets that the latest surge in the pandemic figures is because of the high testing.

Also standing on the negative side is the signal from the White House about a few more punitive measures for China despite President Trump’s absence of ‘OK’ on the sanctions concerning the Hong Kong issue. Furthermore, the New Delhi-Beijing tension could also be considered as a risk-negative catalyst.

Talking about the positives, the traders are likely preparing for the US players’ return after Friday holiday. The reason being Thursday’s upbeat employment data couldn’t get enough celebration.

In addition to S&P 500 Futures, the US 10-year treasury yields and Japan’s Nikkei also flash mild gains as we write. This suggests the traders are more interested in cheering the good news to worry about the prevailed tension.

As a result, today’s US market open and the ISM Non-Manufacturing PMI will be the keys to follow. Should the services gauge surge beyond 50 mark, expected 49.5 versus 45.4 prior, traders will have an extra reason to portray the risk-on mood.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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