S&P500 Futures dribble near 4,600, yields improve as China stimulus, mixed data join month-end positioning

• Market sentiment remains sluggish as NFP week begins with slightly positive news.
• China teases more stimulus, Fed’s Kashkari flags unemployment/growth fears amid higher rates.
• Official activity data from China came in mixed for July.
• US ISM PMI, NFP and central bank events will offer a busy week ahead.

The risk profile remains dicey, despite the latest improvement, as traders begin the NFP week with mixed data and news. That said, China stimulus hopes and mostly downbeat comments from the central bankers favor the mildly positive market sentiment. However, the mixed prints of the official PMIs from Beijing join the cautious mood ahead of the key data/events to prod optimism amid a sluggish start to the crucial week.

Amid these plays, S&P500 Futures struggle around the yearly high, making rounds to 4,600 of late, whereas the US 10-year and two-year Treasury bond yields edge higher after reversing from the three-week top the previous day. That said, the US Dollar Index (DXY) remains indecisive around 101.75 following the previous day’s retreat while prices of Gold and Crude Oil eased to around $1,957 and $80.20 of late.

During the weekend, Bloomberg came out with the news while quoting China’s State Council Information Office to flag hopes of witnessing more measures from the dragon nation to boost consumer demand, up for publishing at around 07:00 AM GMT on Monday.

Elsewhere, Minneapolis Fed President Neel Kashkari flagged fears of job losses and slower growth while praising the inflation outlook. The policymaker also criticized the central bank’s aggressive monetary tightening campaign to tamp down price surges. The same joined Friday’s softer prints of the Fed’s favorite inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index, to underpin the cautious optimism.

Furthermore, European Central Bank (ECB) President Christine Lagarde termed the latest economic output numbers from France, Germany and Spain as “quite encouraging” and added strength to the slightly positive mood, which in turn prod the US Dollar’s haven demand.

It should be noted that the strong points of the US Gross Domestic Product (GDP) Annualized for the second quarter (Q2) joined the upbeat figures of the US Durable Goods Orders for June to allow the US Dollar to stay firmer for the second consecutive week. However, the Federal Reserve’s (Fed) clues for the September rate hike failed to impress the greenback buyers and joined the ECB’s dovish hike to favor odds of witnessing a sooner end to the rate hike trajectory at the major central banks, which in turn underpin the market’s optimism.

Elsewhere, upbeat earnings from the global tech giants and the International Monetary Fund’s (IMF) upward revision to the growth forecasts favor the risk appetite.

Looking forward, the US ISM PMIs and the risk catalysts can entertain the traders ahead of Friday’s US jobs report for July.

Also read: Forex Today: Can Dollar's momentum continue in the week of US employment data?