The GBP is the strongest and the EUR is the weakest as the North American session begins

It will be tough to beat yesterdays rollercoaster after the higher than expected CPI, followed by squeezes the other way, followed by a resumption of the CPI price trends after Fed’s Bullard said he favors 50 bps, would like to see 100 bp rise by July, and Quantitative tightening to start, and wouldn’t mind acting between meetings as well.

That sent yields sharply higher and the 10 year over 2% for the first time since August 2019. The 2-10 year spread moved toward the low 40 basis points vs 90 basis points at the beginning of the calendar year.

yields US

The 2-10 year spread has narrowed to 43 bps

The dollar moved higher. Crude oil moved higher and back above $90.

Today, the snapshot of the forex market is showing the USD is mixed with gains and losses vs the major currencies balanced. The USD is higher vs the EUR, CHF and AUD and lower vs the GBP, JPY, and CAD.

The strongest currency is the GBP while the weakest is the EUR. For the GBPUSD, its price moved back above near converged 100/200 hour MAs in the London morning session at 1.3546. Bullish. They also reported some stronger construction spending/industrial production which may have also helped the move to the upside. PS the pair is testing the high from Wednesday and the high from high from the previous Wednesday at 1.3587 to start the day.

For the EUR, ECB Lagarde is sticking to her guns that hiking rates would not solve any problems (see her comments from overnight HERE). The EURGBP has moved lower by 0.34% in trading today and is trading back below its 200 hour mA at 0.84056.


The strongest to the weakest of the major currencies

IN other markets as North American traders enter for the day shows:

  • Spot gold is trading up $4.30 or 0.24% at $1831.15
  • Spot silver is trading down -$0.19 or -0.85% at $23.00
  • WTI crude oil is trading up $1.43 at $91.31
  • Natural gas futures are trading near unchanged at $3.94
  • The price of bitcoin is trading at $43600. That is down from yesterday’s high at $45850

In the premarket for US stocks, the major indices down modestly.

  • Dow industrial average lower by -58 points after falling -526.47 points yesterday
  • S&P index is trading down down eight points after yesterday’s -83.12 point decline
  • NASDAQ index is trading down -26 points after yesterday’s -304.73 point decline

In the European equity markets, the major indices are trading lower with the France’s CAC leading the way -1.1%

  • German DAX, -0.3%
  • France’s CAC, -1.1%
  • UK’s FTSE 100 -0.7%
  • Spain’s Ibex, -0.9%
  • Italy’s FTSE MIB -1.0%

In the US debt market, the yields are down by 1 to 3 basis points after yesterday’s sharp move to the upside which saw the two year yield move up around 25 basis points in the tenure yield move up about 12 basis points.


US yields are lower after yesterday’s sharp rise

In the European debt market the benchmark 10 year yields are also lower with the German tenure down for basis points at 0.249%. The Italian 10 year is also lower but within 10 basis points of comparable US yields. The German to Italian spread is also continued to widen reaching 165 basis points. The start of the year it was around 130 basis points.

European yields

European benchmark 10 year yields


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