Risk to US-China trade deal
The USD is the strongest and the NZD is the weakest as NA traders enter for the day. The US-China trade tensions have escalated. Peter Navarro is on CNBC saying that “the bill must come due” to China for hurt caused by the virus. Rumblings from China are that a renegotiation of a traded deal is in their best interest. Pres. Trump is in discussions with US companies (Intel is cited) about moving production to the US. The game is on, and it is leading to flows into the USD and CHF, and out of the “riskier currencies” like the NZD and AUD.
The ranges and changes are showing the flow into the USD. The major currency pairs vs the USD are mostly at high levels (EUR, GBP, JPY, CAD, AUD and NZD are at dollar high levels). The GBPUSD is the most under pressure with a decline of -108 pips. The NZDUSD is lower by -65 pips.
In other markets,
- Spot gold is trading near unchanged at $1702.83. The high reached $1711.70. The low was at $1693.95
- WTI crude oil has moved higher and trades near highs after Saudi Arabia voluntarily cut production by 1M more barrels in June. The June contract is up $0.51 at $25.25. The high reached $25.58. The low is at $23.67
In the pre-market for US stocks, the futures are implying a lower opening:
- Dow is down -184 points
- S&P index is down -24 points
- NASDAQ index is down -65 points
In the European equity markets, the major indices are lower:
- German DAX, -1.2%
- France’s CAC, -1.5%
- UK’s FTSE 100, -0.3%
- Spain’s Ibex, -1.3%
- Italy’s FTSE MIB, -0.3%
In the US debt market, yields are mixed with the shorter end down while the 30 year bond yield is up 1.2 basis points. The yield curve is steepened by about 1 basis point.
In the European debt market, the benchmark 10 year yields are mostly higher: