S&P500 Futures print mild gains, yields pare the biggest daily jump in week as peak rates are in sight

• Market sentiment improves amid gradually firming bias about no rate hikes from major central banks.
• RBA’s Lowe, polls on ECB and RBNZ joins Fed talks to suggest an end of hawkish cycle.
• Mixed concerns about China, cautious mood ahead of more US inflation clues eyed prod optimists.

The risk appetite remains slightly positive on early Friday as traders gather confidence in expecting no rate hikes amid mostly downbeat inflation clues from major economies.

While portraying the mood, the S&P500 Futures defend the late Thursday’s corrective bounce off the lowest level since early July, up 0.20% intraday near 4,490, whereas the benchmark US 10-year Treasury bond yields remain idle around 4.10% after rising the most in a week the previous day.

That said, unimpressive US inflation data allowed the Fed policymakers to cheer the victory over price pressure while Reserve Bank of Australia (RBA) Governor Philip Lowe defends latest pause in the monetary policy by citing fears of higher unemployment.

Further, the latest Reuters poll about the Reserve Bank of New Zealand’s (RBNZ) and the European Central Bank (ECB) were also in favor of marking no interest rate changes in the next monetary policy meetings.

Alternatively, the fears of witnessing more geopolitical tussles between the West and China, mainly due to the US restriction on investment in China technology companies and the likely repeat of the measures by the UK and European Union, weighed on the sentiment. Further, the chatters about slower economic growth in top-tier economies and recession woes in China, Germany and the UK pushed back the US Dollar bears as well.

Furthermore, the news that China’s leading realtor Country Garden braces for debt restructuring and the anxiety ahead of the more US data also prod the optimists.

It should be noted that the Chinese policymakers’ sustained defense of Yuan also favor market’s confidence that the Asian leader will overcome the economic fears, which in turn underpinned the latest cautious optimism in the zone.

Looking forward, the US Producer Price Index (PPI) for July will precede the first readings of the University of Michigan’s (UoM) Consumer Sentiment Index (CSI) for August to direct immediate NZD/USD moves. Also important will be the UoM 5-Year Consumer Inflation Expectations for the said month and China news.

Also read: Forex Today: Dollar remains strong after US CPI