Risk off flows dominate trading

Stocks are lower and that is leading to risk off flows in the major currencies. Concerns about a trade war reigniting with China and push-me, pull-me anxiety of the coronavirus are the main concerns. That has the JPY and CHF as the beneficiaries (and strongest currencies) and the AUD and NZD as the weaakest. Today is the May 1 Labor Day holiday (London is open however). Market PMI and ISM data will be released at 9:45 AM ET and 10:00 AM ET respectively.

Risk off flows dominate trading

The ranges and changes are upward price action in the USDCAD for the 2nd day running. The pair has a 115 pip trading range and is nearer the high for the day (PS, the 200 hour MA at 1.4049 is helping to stall the rally - the high reached 1.4044 and backed off). The AUDUSD and the NZDUSD and GBPUSD are trading near lows. The JPY pairs are trading near lows as the Pavlovian selling on lower stocks and trade concerns, have those currencies under pressure. EURGBP is rising and at session highs.

The rateThe ranges and changes for the major currency pairs

In other markets:

  • Spot gold is NOT following the flight to safety trend. It is down $7 on the day or -0.41% at $1679.53. The high price extended to $1690.41. The low was at $1670.71
  • WTI June crude oil it is trading up $1.17 or 6.26% at $20. The July contract is also higher by 0.7 $0.05 or 3.43% at $22.60.

In the pre-market for US stocks the futures are implying a sharply lower opening. In addition to concerns about China/coronavirus, Amazon's earnings-per-share came out weaker than expected and said they are in a spend, spend, spend mode. Apples earnings beat expectations but are being dragged down by other concerns. Of note that this week is the NASDAQ index nearly got back to unchanged on the year. That may be a high watermark that will have trouble passing going forward. Amazon shares are down -5%, while Apple shares are down -2.5%

  • Dow is -450 points
  • S&P is -60 points
  • Nasdaq is -212 points

In the European market, the UK FTSE 100 is trade down about 2% on the day. Other markets are closed for Labor Day holiday.

In the US debt market, the yields are lower with the yield curve flattening a bit. The 2 – 10 year spread is at 42.38 basis points versus 44.37 basis points yesterday.

US yields are lower

The benchmark 10 year yield in the UK is currently trading up 1.5 basis points at 0.246%. The other debt markets are closed for the holiday.