Markets Flatline in Europe

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Risk pressured a bit Europe
FX flat
Nikkei -0.12% Dax 0.07%
UST 10Y 0.70%
Oil $25/bbl
Gold $1703/oz
BTCUSD $8766

Asia and the EU
No Data

North America Open

It’s been a very quiet day in the markets with both equities and FX essentially flatlining on the day after selling off mildly in Asia.

Some analysts thought that the renewed US-China tensions and especially President Trump’s order for federal retirement funds to be pulled from Chinese equities may have weighed on risk in Asia. Investor sentiment certainly appears to be far more hesitant today than yesterday but the selling pressure is remains muted.

The eco calendar is nearly barren today with only US CPI on the docket, so newsflow is likely to be light which explains the very lackluster price action so far. Equity markets have retraced a large portion of their COVID-19 losses but have now traded up to key resistance levels with S&P essentially churning around the 2900 level while Nasdaq appears to have stalled at 9300.

The rebound rally is waiting for some confirmation of the return of economic activity while the central bank action remains highly supportive. Today the Fed will make its first foray into the corporate credit market buying ETFs in order to stabilize the markets. The credit markets have already stabilized, but the Fed is keen to make good on its promise in order to maintain market credibility.

In FX land currencies are basically at a standstill but the dollar rally yesterday appears to have stalled with USDJPY trading back to 107.50 after yesterday’s strong move. Still, the US economy remains the relative strength winner for the time being so dollar flow should continue to be bid especially if US rates begin to inch higher. The benchmark 10yeer appears to have bottomed at 60bps and as it trades towards through the 70 level this week the move could prove supportive for the buck.

Boris Schlossberg
Managing Director

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