The CAD is the strongest and the NZD is the weakest as US traders return from their 3-day Martin Luther King day holiday and markets are reacting to higher oil, higher yields, lower stocks, fear of inflation...you name it.
The USD is also stronger in reaction to the different stories. Omicron in the US is seeing falling cases but China is seeing more lockdowns as it starts to see the variant enter it's borders as the Olympics get closer. The threat of more lockdowns, threaten global supply chains which can lead to higher inflation. The China’s central bank Monday cut the borrowing costs of its medium-term loans for the first time since April 2020.
US stocks are set to open the holiday week lower with the Nasdaq down close to -250 points The index rose 86 points and thwarted the 2nd attempt to close below the 200 week MA on Friday. Today, the index is set to open below the 200 day MA at 14726.49 (closed at 14893.75 on Friday). Goldman Sachs earnings were weaker than expectations today and is pushing lower (-3.75%) in pre-market trading. The earnings season kicks up a notch this week.
US 10 year yield moved to a new cycle high at 1.855% (highest since January 2020), but is back down near 1.81% as stocks weaken. (up from around 1.78% near the close on Friday). German 10 year yields toyed with 0.0% (reached -0.002%) before moving back down. . The German ZEW sentiment index soared to 51.7 from 29.9 last months (and expectations of 32.1) on hopes that the economy will once again more forward after the omicron runs it's course.
Crude oil is higher as a drone strike from Iranian backed rebels in Yemen on the port of Abu Dhabi in the United Arab Emirates, sent concerns about the supply of oil from that region higher (the UAE is one of the countries that is able to increase production currently). Also, expectations that the omicron spread will not influence demand as much as expected is helping to continue the move to the upside in crude oil. The price is trading at the highest level since 2014.
In other markets, the morning snapshot shows:
- Spot gold is trading down $3.30 -0.18% at 181520
- Spot silver is unchanged at $22.97
- WTI crude oil is trading up one dollar at $84.80.
- Bitcoin is trading at $41,834.
In the premarket for US stocks, the major indices are trading lower after Friday's mixed results which saw the NASDAQ moving higher, the S&P unchanged and the Dow moving lower
- Dow industrial average -260 points after Friday's -201.81 point decline
- S&P index -41 points after Friday's 3.82 point rise
- NASDAQ index -233 points after Friday's 86.94 point rise
In the European equity markets, major indices are trading lower as well
- German DAX, -1%
- France's CAC -0.8%
- UK's FTSE 100 -0.5%
- Spain's Ibex -0.5 percent
- Italy's FTSE MIB -0.6%
In the US debt market, the yields are higher as inflation fears return to the market sentiment.
In the European debt market, the benchmark 10 year yields are marginally lower. The German tenure yield once again toyed with the 0.0% parity level before moving back to the downside.
