US Dollar Profits as Nasdaq 100 Drops Amid Hawkish Fedspeak

USD/NASDAQ

The haven-linked US Dollar outperformed its major counterparts on Monday, appreciating amid a deterioration in risk appetite. By the end of the Wall Street trading session, the tech-heavy Nasdaq 100 dropped about 1.1% as the blue-chip-oriented Dow Jones was barely little changed.

The difference between these two over the past 24 hours continues to speak of hawkish Fed policy woes. Fedspeak remained the focus on Monday.

San Francisco Fed President Mary Daly said they must not ignore policy lags, “which may last several quarters.” However, she added that the central bank is still “very far” from its inflation goal. She sees rates peaking between a 4.75% – 5.25% range. The takeaway is that a policy pivot is still likely some way away.

Treasury yields cautiously rose. Unsurprisingly, anti-fiat gold prices suffered as the yellow metal weakened for a 4th consecutive trading session. That is the worst losing streak in over a month. The three worst-performing currencies against the US Dollar on Monday were the Japanese Yen, the Australian Dollar, and Euro. They weakened by 1.25%, 1.02%, and 0.8%, respectively.

Tuesday’s Asia-Pacific trading session is lacking notable economic event risk. That places the traders’ focus on risk appetite as the market’s key driver.

Wall Street’s lackluster performance on Monday is opening the door for downside follow-through in regional bourses, placing the Nikkei 225, ASX 200, and Hang Seng Index at risk. This may continue benefiting the US Dollar.

Further concerns may emanate from China, with fears of harsh Covid-induced lockdowns coming back into focus. That is because, according to Bloomberg, the city of Shijiazhuang has suspended schools and asked residents to stay at home for 5 days. The city is a testing ground for China trying to move past virus restrictions.

Signs that it isn’t working could mean further delays to reopen, potentially harming economic growth. The US Dollar is trading at its highest against the Chinese Yuan since November 10th.

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