S&P 500 Challenged by US Rates, GBP Bulls Charge, Eyes on AUD/NZD - US Market Open
Equities: Risk sentiment continues to feel the weight of the recent spike higher in global bond yields with notable pressure seen in the US tech space as the Nasdaq underperforms. Elsewhere, initial jobless claims were rather uninspiring with the headline figure up 861k vs expectations for 765k. Of note, this is figure will be for the NFP reporting week.
Euro Stoxx 50 Sector Breakdown
Outperformers: Basic Materials (0.3%), Technology (-0.1%), Consumer Discretionary (-0.1%)Laggards: Financials (-1.5%),Energy (-1.4%), Utilities (-1.0%)
US Futures: S&P 500 (-0.8%), DJIA (-0.6%), Nasdaq 100 (-1.2%)
Intra-day FX Performance
FX: The Pound has been the outperformer throughout the session with broad-based gains. While there has been little in the way of new information, the current narrative of a successful vaccine program alongside reduced uncertainty with Brexit in the rearview mirror continues to underpin. Comments by BoE’s Saunders were slightly less dovish with the rate-setter stating that there is limited scope at present for negative rates, which is largely a reiteration of the BoE’s current stance. Today’s move, however, looks to be more of a technical nature with stops tripped at 1.3950 and 0.8650 in EURGBP. The topside target for GBP bulls remains 1.40.
The USD has sagged a little, despite US yields continuing to track higher. While a lot of attention has been placed on bond market moves as of late, it is the pace of the move that is a concern and not so much the general trajectory. That said, while the sharp move higher has lent support to the greenback, should the move begin to slow, USD shorts against high beta currencies in particular may be reloaded.
Elsewhere, my attention will be on AUD/NZD with the upcoming RBNZ meeting in focus. For a full analysis of the RBNZ decision, click here
Commodities: Gold prices have continued hover around recent lows. Price action in the precious metal has been weak, with bounces remaining shallow. As real yields push higher, risks remain tilted to further losses for Gold.
Looking ahead: EIA weekly oil inventories will garner the attention of oil traders. Reminder, yesterday’s API release saw a larger than expected drawdown. Meanwhile, flash PMI’s will kick off with Australia later today.
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