As the North American session begins the NZD is the strongest of the major currencies while the EUR is the weakest. The EURUSD has moved down after three days of gains saw the currency pair move up toward the 50% midpoint of the trading range since the June 27 peak up at 1.06144. The low price reached last week (July 14) reached 0.99515. The midpoint is at 1.02829. The high price today of 1.0272 got within 10 pips of that midpoint level, before starting a move to the downside seen over the last 4-5 hours of trading. The ECB is expected to raise rates by 25 basis points at their meeting tomorrow, but there was a chatter that a 50 basis point hike may be considered. Italy survived a political crisis as it appears prime minister Draghi has reconsidered quitting although there is coalition concerns that remain to be repaired/saved. The Italian benchmark 10 year yields are down around -9 basis points after trading as much as -14 basis points lower on the day.
The USD is modestly stronger today after 3 days of declines. Existing home sales will be released at 10 AM ET (accounts for 80% of US home sales). Yesterday has a source are lower than expected but building permits were better-than-expected.
US stocks futures are pointing to a modestly lower opening after strong gains seen in yesterday. Netflix reported earnings yesterday and although subscribers declined by about a million, that was less than the 2 million expected. There stock is trading higher (+6.5%) in premarket trading.
The US 10 year yield is back below the 3.0% level at 2.971%. It closed near 3.02% yesterday.
Mortgage demand in the US fell to the lowest level in 22 years. Applications fell -6.3% in the weekly report just released. The purchase index is now ~19% lower than the same week a year ago while the refinancing index is down ~80% as compared to that same period. The sharp decline in the refinancing index is not a surprise given that 30 year mortgages have moved from near 2% to 5.82% this week
Also on the calendar today is crude oil inventory data will be released with the expectations of 1.357 build. The private data yesterday showed a build of 1.860M for crude and 1.290 for gas.
A look around the markets shows:
- spot gold is trading down $-3 or -0.17% at $1708.30
- spot silver is trading up $0.05 or 0.27% at $18.80
- WTI crude oil is back below the 100 level trading at $99.08
- the price bitcoin is trading marginally higher by $236 at $23,734
The US stock futures are implying a modestly lower open for the major indices after solid gains yesterday:
- Dow industrial average -26 points after yesterdays 754.44 point rise
- S&P index -3.9 points after yesterdays 105.84 point rise
- NASDAQ index unchanged after yesterdays 353.10 point rise
In the European equity markets, the major indices are mostly lower:
- German DAX, -0.46%
- France's CAC -0.09%
- UK's FTSE 100 -0.17%
- Spain's Ibex -1.0%
- Italy's FTSE MIB -1.01%
In the US debt market, yields are lower across the board with the 2 – 10 year spread modestly higher but still negative them at -20 basis points (vs. -21.2 basis points at the close yesterday).
In the European debt market, the benchmark 10 year yields are also down ahead of the ECB decision tomorrow.
