The strongest to weakest of the major currencies

The strongest weakest of the major currencies

ahead of the US jobs report at 8:30 AM ET, shows the AUD is the strongest while the JPY is the weakest. The USD is mixed with gains versus the JPY offset by declines versus the AUD. The gain in the CHF is offset by the decline in the NZD. The EUR, GBP and CAD are little changed.

The European inflation

data came in at a record level but was foreshadowed by Spanish and German inflation earlier this week. Moreover there is expected higher inflation going forward.

US yields are sharply higher, after three days of declines. The tenure yield is up to 2.40%, while the two year is at 2.38%. The two – 10 year spread is getting closer to the inversion level but still is a pip or two away from that inversion. Going negative is thought to be a precursor to a recession but not until further down the road.

Speaking of further down the road, the US jobs data – which is a lagging indicator - is expected to show another strong gain. The expectations are for a near 500K rise after last month 678K increase. The ADP report on Wednesday showed a gain of 455K, but the correlation has not been accurate of late. Market participants will be eyeing the labor force participation rate which came in at 62.3 percent last month. As inflation rises will people re- enter the workforce as their buying power deteriorates quickly. The unemployment rate is expected to come in at 3.7% versus 3.8% last month.

Crude oil prices are back below the $100 level after Pres. Biden announced a 1 million barrel per day SPR sale over the next six months. OPEC this week said that they would continue to stay on the 400 K production increases schedule. US Baker Hughes will be released later today. Pres. Biden is now urging US oil companies to pump more oil to help bring down oil prices.

US stocks are higher after two days of declines.

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

  • Spot gold is trading down $-8.92 or -0.45% at $1927.54
  • Spot silver down $0.12 or -0.48% at $24.63
  • Spot crude oil is trading back below $100 at $98.56 that's down $1.70 on the day
  • Bitcoin is trading lower at $45,100

In the premarket for US stocks, the major indices are trading higher ahead of the jobs report and after a two day decline to and the calendar month and quarter:

  • Dow industrial average is up 206 points after yesterday's -550.46 point decline
  • S&P index up 26 points after yesterday's -72.04 point decline
  • NASDAQ index is up 108 points after yesterday's -221.76 point decline

In the European equity markets, the major indices are mostly lower with the exception of the UK's FTSE 100

  • German DAX, up 0.4%
  • France's CAC, up 0.45%
  • UK's FTSE 100 up 0.25%
  • Spain's Ibex, up 0.75%
  • Italy's FTSE MIB up 0.85%

In the US debt market, US yields are sharply higher ahead of the jobs report. The yield curve continues to move toward parity with the two – 10 year spread basis point or so away from going inverted.

US yields
US yields are higher

In the European debt market, the benchmark 10 year yields are higher as well but trading closer to their low levels.

European benchmark yields are higher