Dollar Weakness Boosts Energy-Exposed Currencies Amid Oil Price Plunge

The US dollar weakened significantly this morning after oil prices plummeted, causing a gap in equity index futures. This move undid some of last week's losses for the S&P 500 and Nasdaq 100, with the semiconductor sector being particularly hit. Shares of Nvidia finished lower but avoided the worst of it, while AMD, Intel, Micron, SK Hynix, Tesla, and SpaceX all declined.

The decline in oil prices also boosted energy-exposed currencies, with the US Dollar Index falling out of the 101 handle. The European Central Bank's Nagel said they are in a good position to respond to surging energy prices, but Dolenc noted that risks ahead remain high. Lane saw the current situation as a 'medium-sized shock' that can return to target in about a year.

Market pricing expects the Fed to leave rates unchanged at this week's meeting, but assigns significant minority likelihoods on a hike. The majority odds are on a September hike. President Trump threatened substantial tariffs on the EU late last week due to fines on tech giants.