The optimistic investor sentiment that was witnessed yesterday in financial markets is set to continue for the second day in a row, with S&P equity futures firmly higher ahead of the opening bell in North America. The equity rally observed yesterday took place despite New York Fed President Bill Dudley reaffirming the FOMC holds a tightening bias, and that the weakness in Q1 was transitory as opposed to larger structural issues. Expecting a rebound in growth over the second quarter, Dudley foresees an opportunity to begin the rate tightening cycle later this year, though the New York Fed President continued to acknowledge this decision would be one that is data dependent. The greenback has managed to build on yesterday’s gains, though the DXY remains well within recent ranges that have contained trading in the USD-linked basket.
One of the factors helping to generate a bid tone in the DXY is the softness in the euro, with negative Greek headlines and a mixed German ZEW survey weighing on the common-currency. The survey from the ZEW Centre showed that the current economic situation in Germany surprised to the upside, coming in with a reading of 70.2 versus expectations of a 56.0 print, a result of negative yields on German debt and robust equity performance leaving participants feeling quite content. The downside from the report was that the expectations side of the survey came in below the median analyst estimate, with economic sentiment falling to 53.3 from the 54.8 witnessed in March, as a weak Q1 on a global basis is offsetting the positive effects a lower euro is having on Germany’s export sector.
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