The AUD is the strongest and the USD is the weakest as the NA session begins

The AUD is the strongest and the USD is the weakest as the NA session begins. ANZ business confidence increased to 1.5 from -3.7 last month. That helped to kickstart the NZDUSD to the upside and the AUD followed. The USD is lower – for a change – despite yields moving higher today. The 10 year yield is up 1.7 basis points for the 30 year is up 2.6 basis points. The shorter end shows the 2 year yield down modestly.

Oil prices are slightly lower currently, after trading to the highest level since August 10, 2020 to $95.03. The gains come on the back of a reduction in U.S. crude stocks that amplified concerns regarding a global supply shortage. Crude prices have surged by nearly 32% in the past three months, a trend attributed to production cuts by major oil producers Saudi Arabia and Russia. Although the rally experienced a brief interruption last week due to emerging economic and demand concerns, it regained momentum following a U.S. government report that revealed a more significant than anticipated drop in crude stockpiles yesterday. Nevertheless prices are currently down around $0.50 at $93.21

Trading of Evergrande shares were stopped in Hong Kong following a report that Chairman Hui Ka Yan is under police surveillance. The company, already facing a liquidity crisis and heavy debt, has been trying to restructure its offshore debt. However, the process hit a snag when it revealed an ongoing investigation into its mainland China division, preventing the issuance of new debt. This division also failed to make a 4 billion yuan payment recently. Since trading resumed after a 17-month suspension, Evergrande’s shares have plummeted by 81%. Ouch.

Looking at the key releases and events today, traders will be watching the weekly initial jobless claims which fell close to 200K last week. The market is expecting a modest rebound higher, but strong job growth remains a concern. At 10 AM, pending home sales will be released.

Feds Powell will speak at a town hall event with educators at 4 PM. Below is the full calendar

  • 8:30am: USD Final GDP q/q

    • Detail: 2.2% forecast, prior 2.1%
    • USD Final GDP deflator Index q/q

    • Detail: 2.0% forecast, prior 2.0%

  • 8:30am: USD Unemployment Claims

    • Detail: 214K forecast, prior 201K
  • 9:00am: FOMC Member Goolsbee Speaks

    • Description: Speaking at the Peterson Institute of International Economics in Washington DC, audience questions expected.
  • 10:00am: USD Pending Home Sales m/m

    • Detail: -1.1% forecast, prior 0.9%
  • 10:30am: USD Natural Gas Storage

    • Detail: 90B forecast, prior 64B
  • 1:00pm: FOMC Member Cook Speaks

    • Description: Pre-recorded closing remarks at the Minorities in Banking Forum in Dallas.
  • 4:00pm: Fed Chair Powell Speaks

    • Description: Speaking at a town hall event with educators hosted by Federal Reserve in Washington DC.

A snapshot of the markets as the NA session gets underway shows:

  • Crude oil is trading down $0.44 or -0.47% at $93.24
  • Spot gold is trading up $0.77 after plunging over -$25 yesterday. Yesterday the price traded to the lowest level since March 13
  • Spot silver is trading up $0.06 or 0.26% at $22.59
  • Bitcoin is trading at $26,441. At this time yesterday, the price was trading at $26,265.

In the US premarket for US stocks, futures are implying that the major indices will open modestly lower after mixed results yesterday saw the Dow industrial average fall -0.20% while the NASDAQ index gained 0.22%:

  • Dow Industrial Average futures are implying a decline of -6.27 points after falling -68.61 points yesterday
  • S&P index futures are implying a loss of -5.5 points after gaining 0.98 points yesterday
  • NASDAQ futures are implying a loss of -39 points after rising 29.24 point yesterday

In the European equity markets, the major indices trading mixed:

  • German DAX, unchanged
  • France’s CAC, +0.20%
  • UK’s FTSE 100, -0.47%
  • Spain’s Ibex, +0.53%
  • Italy’s FTSE MIB, +0.18% (10 minute delay)

In the Asian Pacific today, equity markets closed mixed

  • Japan’s Nikkei 225, -1.54%
  • China’s Shanghai Composite, 0.10%
  • Hong Kong’s Hang Seng, -1.36%
  • Australia’s S&P/ASX 200, -0.08%

In the US debt market, yields are lower with the yield curve flattening

  • 2-year yield, 5.135%, -0.6 basis points
  • 5-year yield, 4.708%, +0.2 basis points
  • 10-year yield, 4.642% +1.7 basis points
  • 30-year yield, 4.759% +2.6 basis points
  • 2 – 10 year spread is up to -49 basis points which is the least negative sinse May, while the 2 – 30 year spread is up to -37.6 which is its least negative level since May 24

In the European debt market, benchmark 10-year yields are trading sharply higher. While US 10 year yields are racing higher, equivalent German 10 year yields are still below 3% and France’s tenures are at 3.5%:

This article was written by Greg Michalowski at www.forexlive.com. Source