Flight to safety flows dominate
As the North American session begins, the USD is the strongest while the AUD and NZD are the weakest. The market stories are leading to a flight to the relative safety of the USD. Europe has seen increases in coronavirus cases and that has led to new restrictions in the UK and France. China PPI fell by -2.1% prompting concerns about pricing power post pandemic. The political heat was turned up with the NY Post saying then VP Biden had contact with representatives of a Ukrainian company (although unconfirmed). Facebook and Twitter suppressed the story prompting manipulation claims by the GOP. On the stimulus front, Mnuchin was pessimistic of a deal as neither side budges. All of that backdrop has the dollar as the beneficiary of the flows today and pre-market US stocks lower (European shares are also lower).
The ranges and changes are varied with GBPUSD, USDCAD, AUDUSD, EURUSD and NZDUSD with decent ranges. The USDJPY and USDCHF ranges are much more modest at 25 and 29 pips respectively in the morning snapshot. The EURUSD, GBPUSD, USDCAD, AUDUSD and NZDUSD are trading near the dollar extremes (higher dollar).
A snapshot of other markets currently shows:
- Spot gold is following the dollar. With the greenback higher, the price of gold is lower. The price of spot is down $10.60 or -0.56% at $1890.84
- The spot silver is down $0.57 or -2.37% $23.68
- WTI crude oil futures are trading down $1.48 or -3.61% at $39.56
In the premarket for US stocks, the futures markets are trading lower with the NASDAQ index leading the way. Yesterday the major indices all closed lower for the 2nd consecutive day
- The Dow Jones down -313 points
- S&P index is down -42 points
- NASDAQ is down -189 points
In the European equity markets, the major indices are trading lower across the board
- German DAX, -2.84%
- France's CAC, -2.23%
- UK's FTSE 100, -1.92%
- Spain's Ibex, -1.75%
- Italy's FTSE MIB, -2.72%
In the US debt market, yields are lower on flight to safety flows.
In the European debt market, the benchmark 10 year yields are mixed with flows into the safety of the German, France, UK debt instruments and moving out of Spain, Italy, and Portugal.