The EUR is the strongest and the JPY is the weakest as the NA session begins

The EUR is the strongest and the JPY the weakest as the NA session begins. The USD is mostly modestly lower after rising last week. The greenback rose against all the major currencies last week with the one exceptions of the a small fall vs the GBP.

Below are the % change of the USD for the week vs the major currencies:

  • EUR, +0.68%
  • JPY, +0.26%
  • GBP, -0.34%
  • CHF, +0.66%
  • CAD, +0.80%
  • AUD+ 1.36%
  • NZD, +0.95%

Today the USD is higher vs the JPY and unchanged vs the NZD as NA traders enter for the day.

The EURJPY is the biggest mover today at 0.72% and is moving back toward the high for the year at 159.324. That in turn, is the highest level for the pair going back to September 2008.

Overnight, the People’s Bank of China (PBoC) reduced its 1-year Loan Prime Rate by 10 basis points to 3.45%. This was contrary to expectations of a cut to 3.40%, especially after the recent 15bps reduction in the MLF rate. The 5-year rate remained at 4.20% (the forecast was for a reduction to 4.05%). Despite these efforts, many doubt the effectiveness of such measures in reviving the slowing economy. Chinese stocks continue to decline, and concerns about defaults among major developers are growing. The Shanghai composite index fell -1.24%. Hong Kongs Hang Seng index fell -1.82%. Last week, those indices fell -1.79% and -5.89% respectively. Recent economic data and the lukewarm policy response have led global banks to reduce their growth forecasts for China for 2023 to below 5%. The ongoing slowdown in China’s vast property sector adds to the concerns, especially with major real estate developers like Country Garden Holdings missing bond payments.

In Germany producer prices dropped by a more significant margin than anticipated, registering at -1.1% (compared to the previous -0.2% and -0.3%). The annual rate stood at -6.0% year-over-year, which was lower than the expected -5.1% and a shift from the previous +0.1%. Despite the unexpected drop in the PPI, Bunds (German bonds) did not react significantly (the 10 year yield is up 4.9 bps at 2.669%). The high yield for the year is at 2.77% which is the highest level since July 2011.

The big event this week will be the Jackson Hole Summit. Feds Powell is expected to speak on Friday at 10:05 AM. Last year he gave a short 8 minute speech outlining a tighter Fed going forward. The target rate was at 2.5% at the time. The current rate is at 5.5%. US CPI was at 8.5%. It is currently at 3.0% YoY. The unemployment rate was at 3.5%. It is at the same level this year.

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

  • Crude oil is trading up $1.05 or 1.3% at $81.70
  • Spot gold is trading up $3.24 or 0.17% at $1892.11
  • Spot silver is trading up $0.23 or 1.01% $22.96
  • Bitcoin is trading at $26,024. At this time on Friday morning the price was at $26,478. The low price on Friday reached down to $25,601 dollars which was the lowest level since June 16. At the low the price tested the 38.2% retracement of the move up from the November 2022 low at $25,577 before rebounding.. The high price over the weekend reached $26,297

In the US premarket for US stocks, major indices are trading higher after mixed results on Friday. The S&P and the NASDAQ closed lower for the 4th consecutive day. The S&P index fell -2.11% last week, while the NASDAQ index fell -2.59%

The snapshot of the major indices shows:

  • Dow Industrial Average futures are implying a gain of 126.34 points after Fridays 25.83 point rise
  • S&P index futures are implying a gain of 21.75 points after a decline of -0.65 points on Friday
  • NASDAQ futures are implying a gain of 103 points after a decline of -26.16 points on Friday.

In the European equity markets, the major indices are trading higher

  • German DAX, +0.79%.
  • France’s CAC, +1.20%
  • UK’s FTSE 100, +0.46%
  • Spain’s Ibex, +0.73%
  • Italy’s FTSE MIB, +1.67% (delayed)

In the Asian Pacific today, equity markets closed mostly lower

  • Japan’s Nikkei 225, rose 0.37%
  • China’s Shanghai Composite, fell -1.24%
  • Hong Kong’s Hang Seng, fell -1.82%
  • Australia’s S&P/ASX 200, fell -0.46%

In the US debt market, yields are higher. Last week, US yields moved higher

  • 2-year yield, 4.964%, +2.8 basis points. 2 year yields last week rose 4.5 basis points
  • 5-year yield, 4.410%, +2.9 basis points.
  • 10-year yield, 4.302%, +5.1 basis points. The 10 year yield rose 9.5 basis points last week
  • 30-year yield, 4.441% +6.3 basis points. The 30-year yield rose 11.0 basis points last week

In the European debt market, benchmark 10-year yields are trading higher:

This article was written by Greg Michalowski at Source