- Gold down $20 to $1,885
- WTI crude up 35 cents at $102.05
- S&P 500 up 9 points to 4183
- US 10-year rates up 5 basis points to 2.82%
The euro fell through the pandemic low of 1.06 to the lowest levels since 2017. It was caught in the wave of US dollar buying due to the combination of widening yield spreads , risk aversion and the expected slowdown in growth in Europe. Today’s comment from the German economy minister summed it up by saying that they are sacrificing economic growth for the fight against Russia. The latest trigger was the impending cut off of natural gas for customers who will not join the ruble payment system, as well as discussions of a gradual oil embargo. The peak of the selloff today was in the London fix, when it hit 1.0514 and there was a 40 pip rally from there.
The pound also continued its swan dive and bottomed out. It eventually found offers just above 1.2500 and bounced back to 1.2576 before fading late. He closely follows the risk trade.
Stocks were volatile today with futures slightly higher before the open followed by a big jump, then a sharp negative turn followed by another huge bounce, then settling virtually unchanged . FX has little on some of the moves, but far from the extent that stock market volatility might indicate. USD/JPY was strong, climbing to 128.61 at the high but still 100 pips off last week’s peak.
Commodity currencies also bottomed out. Citi has been talking about buying USD until the end of the month, so we’ll keep an eye on the same in the day ahead. The yen will be the subject of particular attention with the decision of the BOJ.