USD is lower to start the new trading week. Stocks higher. Yields Lower

The USD is lower. US stocks are higher in pre-market futures trading. US yields are lower.

The market is approving of the naming of Scott Bessent the new Treasury Secretary. Bessent won the battle that was whittled down to Kevin Warsh and Marc Rowan after Howard Lutnick was knocked off the list and was instead being tabbed as the Commerse Secretary. About Bessent:.

• Founder of Key Square Group and former Yale professor, is a key adviser to Trump’s campaign.
• Supports traditional Republican economic policies and Trump’s use of tariffs in trade negotiations.
• Supports Trump’s tariff policies and Republican economic strategies.
• Proposed a three-point plan: 3% economic growth, reducing the deficit to 3% of GDP, and increasing domestic oil production by 3 million barrels/day

In a Fox Op-ed Bessent wrote on tariffs that they should be “Used strategically”, adding “Tariffs can increase revenue to the Treasury, encourage businesses to restore production and reduce our reliance on industrial production from strategic rivals.”

That is better than an across-the-board tariff on all imported goods.

In other news:

Isreals Netanyahu reportedly approves a ceasefire deal with Hezbollah “in principle”, according to CNN citing sources.

BOE’s Dhingra said UK no longer looks like an outlier for inflation among advanced economies and that there are disinflationary risks now. BOE’s’ Lombardelli said inflation has not been beat but favors a gradual removal of monetary policy rrestriction. Lane does not feel monetary policy should not remain restricted for too long.

A snapshot of the US stock market is employed by the futures shows:

• Dow industrial average +313 point
• S&P index +29.16 points.
• NASDAQ index +103 points

In the US debt market yields are lower:

• 2 year yield 4.332%, -3.6 basis points
• 5-year yield 4.245%, -5.3 basis points
• 10-year yield 4.339%, -7.1 basis points
• 30 year yield 4.523%, -7.1 basis points

In other markets

• Bitcoin did not make it to $100K. The digital currency reached a high of $990,800 on Friday. Over the weekend the high price reached $99,010 on Saturday. The high price today reached $98,966.
• Crude oil is trading down $0.13 and $71.11.
• Gold is down $38.48 or more is 1.42% at $2677.55

Technically, what is the price action telling traders in some of the major currency pairs:

• EURUSD: The EURUSD gapped higher over the weekend from Friday’s closing level at 1.0414. The opening price today was at 1.0472.. The high price has extended to 1.04971. That took the price into a swing area going back to October 2023 between 1.0483 and 1.0500. The 61.8% retracement of the range from last week cuts across at 1.05021. Those levels are targets to get to and through on the topside and if so would have traders looking toward a downward-sloping trendline cutting across near 1.0523. Getting above those levels increases the buyers confidence. If sellers leaned against the aforementioned levels, we could see rotation back to the downside as resistance holds on the first test, and the buyers and sellers define the opening range for the trading this week.

• USDJPY: The USDJPY fell below the 100 bar moving average(blue line on the chart below) on the 4-hour chart in the Asia-Pacific session, but when the price approached a swing area between 153.26 and 153.46, the sellers turned to buyers. The price moved back above that 100-bar moving average and extended up to its 100-hour moving average at 154.678. Sellers leaned against that level and have since pushed the price back down. As the US session begins, the price is back below the 100 bar moving average on the 4-hour chart and testing a swing area at 153.88. Get below that level, and the aforementioned swing area down to 153.26 would be eyed. If momentum cannot be established below the 154.029 level, we could see another rotation back to the upside as buyers and sellers battle it out.

• GBPUSD: The GBPUSD moved higher and back into a swing area between 1.2596 and 1.26137. The price high extended to 1.2606 and backed off. The comments from central bankers probably didn’t help as they lobby for cuts going forward. Technically the price needs to get above the aforementioned swing area to show that the buyers have some hope. Absent that and the downside remains the path of least resistance for the pair. The low last week reached 1.2486

This article was written by Greg Michalowski at www.forexlive.com.