The strongest to the weakest of the major currencies
As the North American session begins, the JPY is the strongest and the NZD is the weakest of the major currencies.The USD is tilting more to the downside. Yields are lower to start the trading day. The US treasury will complete the coupon auctions today at 1 PM with the auction of 7-year notes, after average demand for the 2 and 5 year issues which were both auctioned yesterday (the 2-year auction auctioned amount was a record yesterday).
The ranges for the major currencies are very narrow vs the 1 month average ranges.
- EURUSD: 24 pips vs 57 pips.
- GBPUSD: 25 pips versus 75 pips.
- USDJPY: 69 pips vs 92 pips.
- USDCHF 23 pips vs. 58 pips.
- USDCAD 29 pips of versus 63 pips.
- AUDUSD 33 pips versus 51 pips.
- NZDUSD 44 pips versus 50 pips.
US stocks are higher with the Nasdaq leading the way with a premarket gain implied by the futures of about 58 points. Crude oil is trading modestly lower with a range of $77.17 and $77.95. .
Bitcoin continued its run to the upside reaching a high of $57,055 (it trades near $56800 currently). The digital currency has now risen some 47% since its 2024 low reached on January 23rd. The cryptocurrency market, including Bitcoin, experienced gains following a report from Coinshares, a digital asset management firm. The report highlighted that crypto investment products had witnessed capital inflows for the fourth consecutive week and that is keeping the digital currencies bid.
Jeffrey Schmid, the newest Fed President by way of the Kansas City Federal Reserve Bank, gave his first major speech which was considered to be a bit more hawkish. Schmid emphasized the necessity of patience in adjusting monetary policy amidst ongoing high inflation concerns. He highlighted the Federal Reserve’s current stance of not preemptively altering policy directions until there is substantial evidence indicating that the battle against inflation is convincingly won. Schmid underscored the importance of not rushing to reduce the Fed’s balance sheet, acknowledging the uncertainty surrounding how much further it could be shrunk. The goal, according to Schmid, is to minimize the Fed’s impact on the financial system, particularly concerning its balance sheet operations. Achieving a 2% inflation target, he noted, would likely entail rebalancing labor markets and moderating wage growth. Schmid also pointed out the potential adverse effects of a large Fed balance sheet, such as unintended consequences on bank lending and liquidity, as well as the risk of asset-price distortions. He called for a cautious approach in response to recent inflation data and advocated for tailored regulatory measures by bank regulators.
US preliminary durable goods orders for January will be released at 8:30 AM ET with expectations of -4.5% (versus 0.0% last month). Case Shiller home price data for December will be released at 9 AM with the expectations of 0.2% increase (6.0% year on year). At 10 AM ET, US consumer confidence for February is expected to come in at 115.0 versus 114.8 last month. Finally, the Richmond Fed index for February will be released at 10 AM ET. Last month the index came in at -15.
A snapshot of the markets as the North American session begins currently shows:
- Crude oil is trading down $-0.13 or -0.17% at $77.45. Yesterday at this time the price was at $76.08.
- Gold is trading up seven dollars or 0.34% at $2037.80. Yesterday this time the process trading at $2013.91
- Silver is trading up $0.15 or 0.67% at $22.65. Yesterday at this time the price is trading at $22.53.
- Bitcoin trades at $57,199. Yesterday this time the price was trading at $54,141
In the premarket, the US stocks the major indices are trading higher:
- Dow Industrial Average futures are implying a gain of 28.77 points. Yesterday the index fell -62.30 points or -0.16% at 39069.24.
- S&P futures are implying a gain of 7.97 points. Yesterday the index fell -19.25 points or -0.3% at 5069.54.
- Nasdaq futures are implying a gain of 59.17 points. Yesterday the index fell -20.57 points or -0.1% at 15976.25
In the European equity markets, the major indices are trading mixed:
- German DAX, +0.60%.
- France CAC +0.21%..
- UK FTSE 100, +0.02%.
- Spain’s Ibex, -0.60%.
- Italy’s FTSE MIB, + 0.17% (delayed by 10 minutes).
Shares in the Asian Pacific markets were mixed after mostly higher levels last week
- Japan’s Nikkei 225, +0.01%.
- China’s Shanghai composite index, was 1.29%.
- Hong Kong’s Hang Seng index, +0.94%. .
- Australia S&P/ASX, +0.13%.
Looking at the US debt market, yields are moving lower. Yesterday, yields rose modestly:
- 2-year yield 4.682%, -3.3 basis points.. At this time yesterday, the yield was at 4.690%
- 5-year yield 4 4.281% -3.3 basis points. At this time yesterday, the yield is at 4.274%.
- 10-year yield 4.267% -3.1 basis points. At this time yesterday, the yield was trading at 4.24%.
- 30-year yield 4.35% -3.2 basis points. At this time yesterday, the yield was at 4.358%.
- The 2-10 year spread is at -41.3 basis points. At this time yesterday, the spread was at -45.2 basis points
- The 2-30 year spread is at -29.4 basis points. At this time yesterday, the spread was at -33.7 basis points.
European benchmark 10-year yields are higher:
European yields