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Wall Street Wobbles, Dollar Dominates: Key Market Moves Unveiled

Market Update - Daniel Ang The Accidental Trader Traders Academy International 9

Wall Street witnessed a notable retreat on Tuesday, with major U.S. equity indices experiencing a downturn amidst strengthening of the Dollar and rising Treasury yields.

Key Points:
๐Ÿ“‰ Dow Jones Dips: The Dow Jones Industrial Average fell significantly, losing 358.76 points.
๐Ÿ’น Treasury Yields Soar: U.S. Treasury yields surged, with the 10-year notes and the 30-year bond both experiencing a rise in yields.
๐ŸŒ Dollar Climbs High: The Dollar Index rose notably, affecting major currency pairs like EUR/USD and GBP/USD.

Wall Street faced a challenging trading session on Tuesday, marked by a broad sell-off that intensified in the latter half of the day. This downturn sent all three major U.S. equity indices โ€“ the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite โ€“ into negative territory. Specifically, the Dow Jones closed at 37,234.22, down by 0.95%, while the S&P 500 and Nasdaq Composite decreased by 0.62% and 0.51%, respectively.

In the bond market, U.S. Treasury yields ascended to their highest levels since mid-December. The yield on benchmark 10-year notes spiked to 4.0695%, a notable increase from the previous week’s 3.95%. Similarly, the 30-year bond’s yield escalated to 4.3063%, up from 4.198%.

The foreign exchange markets saw the Dollar gaining considerable strength, reaching a one-month high. This surge came as traders adjusted their rate expectations and kept a wary eye on the evolving tensions in the Middle East. The Dollar Index rose by 0.96%, impacting major currency pairs. The EUR/USD pair fell by 0.73% to 1.0868, and the USD/JPY pair rose by 1.02% to 147.28. Additionally, the GBP/USD pair traded down by 0.80% on the day.

Commodity markets were not immune to these movements. Crude oil prices witnessed mixed trends, with West Texas Intermediate (WTI) crude dropping by 0.39% to settle at $72.40 per barrel, while Brent crude slightly rose by 0.18% to $78.29. In contrast, gold prices declined in opposition to the strengthening Dollar, with spot gold falling 1.3% to $2,027.39 per ounce.

In the digital assets space, Bitcoin (BTC/USD) staged a modest recovery from its overnight low, hovering around $43K in Asian trading hours. Analysts speculate that the underperformance of Bitcoin since the launch of the spot BTC ETFs may be tied to concerns over potential rate cuts by the Federal Reserve.

Investors and market analysts are now keenly awaiting the release of the U.S. Retail Sales data for December 2023. This report is crucial as it could influence the Federal Reserve’s decision-making in its upcoming FOMC meeting scheduled for February 1. The market expectation is set for a rise in retail sales to 0.4% month-over-month, up from November’s 0.3%. The outcome of this report could be a pivotal factor in determining the Fed’s stance on monetary policy adjustments.

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