The strongest to weakest of the major currencies

The AUD is the strongest of the majors for the 2nd consecutive day after the higher than expected rate rise on Tuesday. The CHF is the weakest of the majors in the morning snapshot. The USD is modestly lower ahead of the Fed decision at 2 PM ET. The Fed is expected to hike rates by 50 basis points as the Fed moves toward a more neutral rate of 2% to 2.5%. The rate hike will take the target rate to 0.75% to 1.0%. The Fed chair Jerome Powell will have his press conference starting at 2:30 PM ET.

Before the rate decision the ADP national employment estimate will be released with expectations of 395K vs 455K last month. The report is a prelude to the US jobs report on Friday. Expectations for nonfarm payroll on Friday is for 390K.

US and Canada trade data will also be released today at 8:30 AM ET. ISM services PMI data will be released at 10 AM. The weekly oil inventory data will be released at 10:30 AM. The private data late yesterday showed a bigger than expected drawdown. The estimate was for -0.8 million crude drawdown but came in at -3.479 million. Below is the private data inventory numbers for the current week:

API private inventory will data released yesterday

The EU announced additional sanctions against Russia including the phasing out of purchases of Russian crude and refined products by the end of the year. That has helped to push the price of oil sharply higher in trading today.

Stocks in the US are higher and yields are mixed with the flattening of the yield curve.

A snapshot of other markets as North American traders enter for the day shows:

  • Spot gold unchanged at $1867.14
  • Spot silver $-0.08 or -0.4% at $22.46
  • WTI crude oil up $4.36 or 4.26% $106.77
  • The price of bitcoin is up sharply by $1400 at $39,126. The gains have taken the price back above its 200 hour moving average at $38,263. Yesterday the price of bitcoin tested swing lows from May and April.

In the US stock market, the major indice futures are implying a higher open after yesterday's modest gains. The major indices have been up for 2 consecutive days to start the week after Friday's plunge (NASDAQ down -4.2% on Friday) that ended the month of April with the major indices down sharply:

  • Dow industrial average up 121.21 points after yesterdays 67.29 point gain
  • S&P index up 16.17 points after yesterdays 20.08 point gain
  • NASDAQ index up 49.85 points after yesterdays 27.74 points gain

European shares are lower after the EU announced additional Russian sanctions:

  • German DAX, -0.05%
  • France's CAC, -0.4%
  • UK's FTSE 100 -0.4%
  • Spain's Ibex -0.4%
  • Italy's FTSE MIB -0.4%

In the US debt market, the yields are mixed but little changed:

  • 2 year 2.7889%, +1.9 basis points
  • 5 year 3.011%, +0.9 basis points
  • 10 year 2.957%, unchanged
  • 30 year 2.998%, -0.8 basis points

The European debt market, the benchmark 10 year yields are higher is higher oil threatens inflation. ECB Schnabel yesterday said that a July tightening is possible. As mentioned the RBA tightened more than expected, and also launched their rate hikes earlier than was expected just a few months ago. The last estimate for CPI came in at 7.5% last week, while the core rose to 3.5% from 2.9%.

European benchmark 10 year yields