- Euro falls to the lowest since 2002
- Saudi Arabia energy minister says they may need to curb output
- The Saudi comments on cutting production don't quite match the headlines
- OPEC+ reportedly miss output target by 2.9 mil bpd in July
- Canada July new housing price index +0.1% vs +0.2% prior
Markets:
- Gold down $12 to $1735
- US 10-year yields flat at 3.03%
- WTI crude oil down 10-cents to $90.23
- S&P 500 down 91 points to 4137
- USD leads, EUR lags
The most-important market move is one that isn't listed in the usual metrics. It was in natural gas, which rose another 8.6% in Europe and 4.2% in the US. That's after Russia scheduled a three-day shutdown for Nord Stream 1 at the end of the month.
That catalyzed the unfolding crisis in European energy and weighed heavily on the euro. The selling picked up early in US trading as liquidity peaked. It took the euro first through parity and then below the July low of 0.9950. Stops were hit below that but a bottom was found at 0.9927.
The pound was also hit hard with consumers set for monthly energy bills in the £300 range in what could be a big drag on consumer spending. Cable briefly fell below the July low and ran stops to 1.1743, which was the lowest since the pandemic spike low.
Perhaps the most-important takeaway today was the price action in the yen. USD/JPY rose 55 pips in the second day of solid gains despite a rout in equities. For much of the past two decades that would have been unthinkable but the yen is losing (lost?) its safe haven status.
USD/CAD rose for the fifth day in six. The first jump came on falling oil prices but even as crude recovered on the Saudi headlines, the loonie barely bounced. The market is presenting a dimming view of the global economy and that's a tough picture for CAD.
AUD and NZD managed to finish the day near flat against the US dollar. That's largely due to the China rate cuts but it will be a tough challenge for those to stay afloat if the kind of broad price action we're witnessing continues.
