Markets lost some juice on Monday after last week’s Powell hype wore off and traders started taking profits.
Stocks in Europe and the U.S. slipped as traders got cautious ahead of new U.S. data and central bank speeches. Meanwhile, oil popped higher and bitcoin slid back toward a key chart level.
Here’s how major asset classes performed in the latest trading sessions!
Headlines:
- New Zealand retail sales for Q2 2025: 2.3% y/y (1.0% y/y forecast; 0.7% y/y previous); 0.5% q/q (-0.2% q/q forecast; 0.8% q/q previous)
- RBNZ proposes lowering lenders’ capital requirements
- Japan leading indicators index for June: 105.6 (106.1 forecast; 104.8 previous)
- Swiss non-farm payrolls for Q2 2025: 5.53M (5.5M forecast; 5.51M previous)
- ECB member Kazaks said current policies are in a “good place” as inflation nears target and further cuts look unlikely
- French PM Bayrou to ask for vote of confidence over austerity budget on September 8
- ECB President Lagarde said US tariffs would have only a “small impact” on GDP
- Germany IfO business climate for August: 89.0 (87.0 forecast; 88.6 previous)
- U.S. building permits final for July: -2.2% m/m to 1.36M units (-2.8% m/m forecast; -0.1% m/m previous)
- U.S. Chicago Fed national activity index for July: -0.19 (-0.2 forecast; -0.1 previous)
- U.S. new home sales for July: -0.6% m/m to 0.65M units (-1.1% m/m forecast; 0.6% m/m previous)
- U.S. Dallas Fed manufacturing index for August: -1.8 (0.2 forecast; 0.9 previous)
- Dallas Fed President Lorie Logan said that the Fed has room to continue reducing its balance sheet
- Europe, Japan postal services suspend shipment of packages to the US over tariff uncertainty
Broad Market Price Action:
The major risk assets retreated on Monday as traders digested Friday’s Powell-induced euphoria, with profit-taking dominating after the Fed chair’s Jackson Hole dovish pivot. European equities closed broadly lower while the UK remained shuttered for a bank holiday. The pan-European Stoxx 600 fell 0.44% as investors awaited key inflation data and parsed the implications of potential rate cuts.
US stocks similarly pulled back, with the S&P 500 declining 0.43% and the Dow Jones shedding 0.77% after hitting record highs Friday. The tech-heavy Nasdaq managed to limit losses to 0.22% ahead of Nvidia’s critical earnings Wednesday.
Gold traded relatively flat near $3,365 despite dollar strength, as rate cut expectations provided underlying support. The 10-year Treasury yield edged up 1.9 basis points to 4.28% as bond traders reassessed the pace of potential Fed easing.
Oil surged nearly 2% to $64.75, likely driven by stalled Russia-Ukraine peace negotiations and Trump’s renewed sanctions threats. Bitcoin stumbled sharply from $113,000 to test $110,000, threatening to break below its 100-day moving average for the first time since April as crypto sentiment soured.
FX Market Behavior: U.S. Dollar vs. Majors:
The dollar staged a notable recovery Monday, rebounding from Friday’s post-Jackson Hole selloff as traders reassessed the Fed’s dovish pivot. The greenback opened with strength in Asian trading, with the yen leading initial weakness as USD/JPY climbed back above its moving averages. Early profit-taking emerged ahead of the London open, briefly pressuring the dollar lower before finding support amid thin holiday volumes with UK markets closed.
European hours saw the dollar consolidate near session highs as EUR/USD slipped lower and cautious sentiment prevailed. The greenback briefly dipped ahead of the US open but quickly reversed higher after July new home sales topped expectations, reinforcing the narrative that Friday’s dollar plunge was overdone. The data showed sales at an annual rate of 652,000 versus 630,000 forecast, providing fresh momentum for dollar bulls.
The dollar maintained its bullish tilt through the New York afternoon, ultimately closing higher against all major currencies. The euro bore the brunt of the selling pressure, falling 0.78%, while the yen weakened 0.50%. Sterling dropped 0.48%, with the pound’s weakness exacerbated by the UK holiday. The commodity currencies showed relative resilience, with CAD down just 0.20% while AUD and NZD limited their losses to 0.08% and 0.29% respectively.
Upcoming Potential Catalysts on the Economic Calendar
- France consumer confidence for August at 6:45 am GMT
- Canada manufacturing sales prel for July at 12:30 pm GMT
- U.S. durable goods orders for July at 12:30 pm GMT
- U.S. Fed Barkin speech at 12:30 pm GMT
- U.S. S&P/Case-Shiller home price for June at 1:00 pm GMT
- U.S. house price index for June at 1:00 pm GMT
- U.S. CB consumer confidence for August at 2:00 pm GMT
- U.S. Richmond Fed manufacturing index for August at 2:00 pm GMT
- U.S. Dallas Fed services index for August at 2:30 pm GMT
- U.K. BOE member Mann speech at 4:00 pm GMT
- Canada BOC Gov. Macklem speech at 6:45 pm GMT
- U.S. API crude oil stock change for August 22 at 8:30 pm GMT
We’ve got a relatively less busy trading calendar today!
Traders will eye France’s consumer confidence for early signs on euro sentiment, but the real action comes later with U.S. data and Fed speak. Durable goods, home prices, and consumer confidence could drive volatility in USD pairs, while BOE’s Mann and BOC’s Macklem may add policy hints before the day closes.
As always, look out for global trade developments and geopolitical headlines that could influence overall market sentiment. Stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
