US dollar rises for third consecutive session

US stocks gain with better-than-expected quarterly earnings results

By Laila Eid | @Laila Eid | 3 July 2023

  • The S&P 500 index has achieved gains for the second consecutive month

  • The US dollar has risen with anticipation of Federal Reserve decisions

  • The Japanese yen has fallen to its lowest level in seven weeks

S&P 500 index achieves second consecutive month of gains

US stocks have shown some stability in the first few sessions of the week as investors await the US Federal Reserve's decision on Wednesday. This follows the S&P 500 index's significant rise, achieving its second monthly gain on Friday, with optimistic reports from Alphabet Inc, Microsoft Corp, and Meta Platforms Inc boosting hopes for a strong earnings season despite ongoing concerns about the US economy's slowdown.

The positive quarterly earnings results of leading technology companies have contributed to the index's rise, despite expectations of a decline in the coming period.

There have been some notable losses in the stock market, with First Republic Bank's stock falling by 38.5% in pre-market trading. JPMorgan Chase & Co has come to the rescue and will buy most of the bank's assets in a recent operation led by US regulators. On the other hand, JPMorgan's stock has risen by 2.4%.

Japanese yen falls to seven-week low against US dollar

At the beginning of the weekly trading, the Japanese yen continued its decline, settling near its lowest level in seven weeks against the US dollar. This is happening at a time when expectations are increasing that the Bank of Japan will delay its decision to control the yield curve for a longer period, while the US dollar is strengthening with continuing positive data.

The obvious divergence in monetary policies between the Bank of Japan and the US Federal Reserve is causing the gap between the yen and the dollar to widen. Moreover, the new governor of the Bank of Japan has confirmed the bank's intentions not to rush to change the current monetary policy.

The USD/JPY currency pair has advanced 0.4% to 136.78, its highest level since March 10, before reducing gains to trade near 136.60.

US dollar sees increase as markets await economic data and events

The US dollar has seen some increase in the first few sessions of the week as markets await important economic data and events that may affect the greenback in the coming period. The dollar index has risen by 0.20% to settle near levels of 1010.80. This is the third consecutive session in which the index has risen, and if it continues, it will be the longest gain streak since late February.

Market expectations are that there is a 90% chance that the US Federal Reserve will raise interest rates by 25 basis points at its meeting on Wednesday. This has contributed to the dollar's rise with the continued improvement of most economic data.

The US Treasury's two-year bond yield rose three basis points to 4.04%, after falling six basis points on Friday due to ongoing banking concerns.