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The CHF is the strongest and the USD is the weakest as NA traders enter for the day |


The US dollar is the weakest currency for the 2nd day

The USD is the weakest of the majors for the 2nd consecutive day this week. That comes after the DXY index reached the highest level since July 2020 on Friday.

All The CHF is the strongest of the majors today a day after SNBs Jordan said a strong CHF limits inflation and will keep the SNB on the sidelines. The USDCHF started a move to the downside (higher CHF). The EURCHF has also moved lower after the remarks and into today.

The AUD is higher after the RBA kept rates unchanged and completed QE bond purchases as expected. They did say they would be patient with a rise in inflation. The AUDUSD initially moved to the downside, but then reversed course and has extended higher. The pair is trading at new session highs to start the NA session. The RBA did raise their central forecast for “underlying inflation in coming quarters to around 3¼ per cent, before declining to around 2¾ per cent over 2023 as the supply-side problems are resolved and consumption patterns normalise”. That helped to reverse the initial trend for the currency back to the upside. Last Friday, the AUDUSD reached the lowest level since July 2020, taking out the December 2020 low at 0.6992. The current price is trading at 0.7106.

US stocks are modestly lower in pre-market trading after two days of buying to end the month of January. Despite the strong gains, the major indices all moved lower in January. Nevertheless, the 2-day of gains in the Nasdaq and S&P to end the month was the best since November 2020

US yields are lower in early trading in the US. The 2-10 year spread is hanging around 60 basis points. Fed officials yesterday did not seem too concerned about the flatter yield curve yesterday on recession fears. Fed’s Barkin said “we are still a long way away from triggering any recession” and “I’m not seeing a weakening in core demand; its not our focus to worry about a recession when demand is still strong”. Fed’s Daly said on growth “US economy is getting into a more self-sustaining path”.

Fed’s Harker and Bullard are expected to speak later today. Also on the calendar is Canada GDP, Canada manufacturing PMI, US PMI and ISM data, US JOLTS job openings, and US construction spending

A snapshot look at the markets are showing:

  • Spot gold is trading up $10.18 or 0.58% to $1807 on the weaker dollar/lower yields
  • Spot silver is up up $0.50 or 2.24% at $22.95
  • WTI crude oil is trading up down -$0.44 at $87.70 after a sharp move higher in January. The price in January was up $13.79 on the month or +18.3%
  • Bitcoin is trading at $38670 after trading at $38458 near 5 PM ET yesterday

In the premarket for US stocks, the major indices are trading mixed (with modest changes). Today, Exxon reported a beat in earnings but softer than expected revenues. UPS also reported a beat in the top and bottom lines. AT&T disappointed. After the close AMD, PayPal, Alphabet, GM, Starbucks, Gilead, Electronic Arts are all scheduled to report. Tomorrow Meta (i.e Facebook) will release their earnings, and on Thursday Amazon will announce. That will just about complete the “big cap” names for this quarter.

  • Dow industrial average down -54 points after yesterday’s 406.39 point rise
  • S&P index is down -7.6 points after yesterday’s 83.68 point rise
  • NASDAQ index are trading +6.7 points after yesterday’s at 469.31 point rise

In the European equity markets, major indices are higher as they catch up to the strong afternoon gains in the US:

  • German DAX, +1.16%
  • France’s CAC +1.17%
  • UK’s FTSE 100, +1%
  • Spain’s Ibex, +1.3%
  • Italy’s FTSE MIB, +1.3%

In the US debt market, yields are lower across the yield curve.:

US yields

US yields are lower

The European benchmark 10 year yields are also mostly lower. The German 10 year is trading just below the parity level was -0.001% after trading as high as +0.028% earlier today.

Europe yields

European 10 year yields are mostly lower

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