Technical Analysis

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

The USD is on the heals of the JPY as flights into safety dominate

As the North American session begins, the JPY (followed closely by the USD) is the strongest and the NZD is the weakest.   The pattern is one following a risk off/flight to safety one as higher energy has traders thinking of stagflation.  The price of crude oil reached an overnight high of $79.78, the highest level since November 2014, before coming off over the last few hours (Putin just said Russia is interested in stabilizing global oil prices which has led to negative ticks as NA traders enter).  Nevertheless, the higher oil has led to a rise in interest rates and move down in stocks.  The German 10 year reached a high of -0.147% as it moves closer to 0.00%.  In the US, the 5 year yield moved back above the 1.000% level at its high (it moved above 1.0% last week to a high of 1.042% before retreating).  The US stocks are down sharply in pre-market trading. Europe shares are also lower with declines near 2%. For the NZD, the RBNZ did indeed raise rates by 0.25% but the rally on the news, led to selling on the fact flows (and ‘risk off’ sentiment – see post here warning of that potential).

In other markets:

  • Spot gold is down $-2.11 or -0.12% at $1757.35
  • Spot silver is down $0.22 or -0.99% at $22.38.
  • WTI crude oil futures are heading back to the downside after Putin’s comments. In trade down $-1.14 or -1.46% at $77.80 in volatile trading
  • The price of bitcoin is trading at $51,631 up $129

In the premarket for US stocks all the major indices are lower after yesterday’s rebound higher. Monday saw shares moved sharply to the downside with the NASDAQ down over 2%. The NASDAQ gained 1.25% yesterday and has given most of those gains back in trading today. The snapshot of the expected open from the futures implies:

  • Dow industrial average -280 points. The index rose 311.75 points yesterday
  • S&P index -44.47 points. It rose 45.24 points yesterday
  • NASDAQ index -167 points. It rose 178.35 points yesterday

In the European equity markets, the major indices traded down over -2.3% overnight in most of the indices, but are seeing a little bit of a pullback:

  • German Dax, -1.7%. The overnight low as -2.51%
  • France’s CAC -1.8%. The overnight low was -2.35%
  • UK’s FTSE 100 -1.45%. The overnight low was -1.87%
  • Spain’s Ibex -2.0%. The overnight low was -2.31%
  • Italy’s FTSE MIB -1.75%. The overnight low was -2.42%

In the US debt market, the 10 year yield is up 1.7 basis points at 1.548%. The five year is trading at 1.0023%.

US rates are higher In the European debt markets, the benchmark 10 year yields are up as well France 10 year now trading at 0.179%. After trading as high 0.208%. The German 10 year is at its highest level since May.
European 10 year rates are higher

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