Stock Futures Rise as Yields, Oil Drop; Dollar Mixed

In the morning video above, I analyze the three main currency pairs—EURUSD, USDJPY and GBPUSD—from a technical standpoint. For each pair, I detail the bias, the key risk levels and the targets that would give either buyers or sellers greater control.

U.S. stock futures are heading higher as the North American session begins, with the Nasdaq 100 set for another record close if gains persist all day. The S&P 500 is likewise nearing its record closing high of 7798.98.

This comes as Treasury yields decline across the curve and crude oil extends its drop despite renewed Houthi attacks on Saudi Arabia. That mix gives stock buyers a more favorable backdrop, though the Middle East remains a source of headline risk.

The U.S. dollar is broadly weaker. The euro and pound lead the advance against the greenback, while the yen is the exception.

U.S. stock futures point higher

At roughly 7:38 a.m. ET, futures were indicating:

• Dow industrial average: Up 235 points.

• S&P 500: Up 30 points, placing the index near its record closing level of 7798.98.

• Nasdaq 100: Up 138 points, setting the index up for another record close.

For the S&P, 7798.98 is the closing benchmark to monitor. Trading above it during the session would be encouraging for buyers. Holding those gains into the close would confirm a new record closing level.

The dollar is mostly lower

The dollar is down against six of the seven major currencies, though movements versus the Canadian dollar and Swiss franc are slight:

• EURUSD: 1.1259, up 0.34%. The dollar is weaker against the euro.

• GBPUSD: 1.3263, up 0.33%. The dollar is weaker against the pound.

• NZDUSD: 0.5612, up 0.27%. The dollar is weaker against the New Zealand dollar.

• AUDUSD: 0.6977, up 0.11%. The dollar is weaker against the Australian dollar.

• USDCHF: 0.8303, down 0.02%. The dollar is slightly lower against the Swiss franc.

• USDCAD: 1.4255, down 0.01%. The dollar is nearly flat against the Canadian dollar.

• USDJPY: 158.06, up 0.10%. The dollar is higher against the yen.

The Canadian dollar is barely moving despite the more positive equity backdrop. Lower crude oil is a counterweight for the oil-sensitive currency.

Currency ranges

The three major pairs have traded in these ranges:

• EURUSD: 1.1203 to 1.1266 — 63 pips.

• USDJPY: 157.78 to 158.24 — 46 pips.

• GBPUSD: 1.3202 to 1.3269 — 67 pips.

EURUSD and GBPUSD are trading near the top of their morning ranges. Buyers hold the stronger hand within those ranges, but breaking above the highs—and staying above—would be required to show further upside momentum.

Treasury yields retreat

U.S. yields are lower across the curve:

• 2-year: 4.7933%, down 3.97 basis points.

• 5-year: 5.0194%, down 4.66 basis points.

• 10-year: 5.2624%, down 4.86 basis points.

• 30-year: 5.6276%, down 3.64 basis points.

The retreat offers some relief from higher borrowing costs. For traders, the next question is whether yields can hold those declines through the data and Fed commentary.

Middle East: Attacks continue, but oil falls

Saudi Arabia confirmed attacks on airports in Jazan and Najran that left three people lightly injured. The Iran-backed Houthis also claimed strikes on Riyadh’s airport and an Aramco refinery. Those broader claims should be distinguished from the airport damage that Saudi authorities acknowledged.

Saudi-backed Yemeni forces have reported advances around the Bab el-Mandeb Strait, a key shipping route linking the Red Sea with the Gulf of Aden. The fighting keeps Saudi energy infrastructure and shipping routes firmly in focus.

Why is crude lower despite those threats? Reuters reports that improving Middle Eastern exports and the G7’s planned release of 100 million barrels of crude and diesel from emergency reserves are easing immediate supply concerns. Saudi Arabia also reported increased flows through its East-West Pipeline, an alternative export route to the Red Sea.

The market is weighing the threat of disruption against the supplies that continue to reach buyers. My takeaway is that the bearish price reaction matters: the attacks have not been enough to sustain an oil rally. A confirmed interruption to production or exports could change that balance quickly.

Commodities and Bitcoin

Crude oil is the clear downside mover, while precious metals and Bitcoin are higher:

• WTI crude futures: $87.65, down $1.78 or 1.99%.

• Gold: Around $4,169.47, up $28.70 or 0.69%.

• Silver: $61.44, up $0.39 or 0.64%.

• Bitcoin: $86,234, up $478 or 0.56%.

Gold is climbing alongside the softer dollar and lower yields.

Bitcoin remains within reach of recent highs

Bitcoin remains near its recent high at $87,374. That level needs to be broken—and the price needs to stay above—to increase the bullish bias and open the door for further upside momentum.

Buyers are within striking distance, but they still need to deliver the next shove. Until resistance breaks, sellers have a level to lean against with risk defined and limited.

Crude oil approaches key downside targets

Technically, crude oil futures are approaching two important downside targets:

• $86.83: The 50% midpoint of the move higher from the July low.

• $86.03: The 100-day moving average.

The low today has reached $87.10 so far, leaving the price above those targets.

The midpoint is the first test. Holding above it would give buyers a level to lean against with risk defined. A break below would increase the bearish bias and bring the 100-day moving average into focus.

For newer traders, these levels help measure the selling pressure. Sellers remain in control, but buyers could look to slow the decline as the price approaches support. Whether support holds or breaks will help define the next move.

North American calendar

Trade data, a fresh labor-market reading and Canadian business activity are on the calendar:

• 8:15 a.m. ET: ADP weekly employment update. Prior: 20,000.

• 8:30 a.m. ET: U.S. August trade balance. Expected deficit: $102.0 billion. Prior deficit: $88.6 billion.

• 8:30 a.m. ET: Canadian August trade balance. Expected surplus: C$1.55 billion. Prior surplus: C$0.77 billion.

• 10:00 a.m. ET: Canadian September Ivey PMI. Prior: 62.7 unadjusted and 64.3 seasonally adjusted.

• 1:00 p.m. ET: U.S. Treasury auction of $58 billion in 3-year notes.

A wider U.S. trade deficit could weigh on the net-export contribution to GDP, although the details of imports and exports will matter.

Fed speakers throughout the day

All times are ET:

• 9:05 a.m.: John Williams, New York Fed president, moderates a panel discussion.

• 10:40 a.m.: Alberto Musalem, St. Louis Fed president, delivers opening remarks.

• 10:45 a.m.: Michelle Bowman, Fed vice chair for supervision, speaks on modernizing regulation and supervision.

• 1:15 p.m.: Jeff Schmid, Kansas City Fed president, participates in a fireside chat.

• 7:00 p.m.: Lorie Logan, Dallas Fed president, moderates an event.

Traders will be listening for any comments on inflation, growth and the policy outlook. Several appearances involve moderation or regulation, so the scheduled events may offer different amounts of monetary-policy guidance.