The AUD is the strongest and the EUR is the weakest as NA traders enter for the day

Technical Analysis

Risk on flows once again

With new stimulus package (GOP and Dem leaders are scheduled to meet today), recovery fund hopes, coronavirus vaccine and the insatiable appetite abroad to buy stocks and in particular US stocks (although European markets are doing pretty well today as well), the “risk on” flows are the focus again today.  The AUD, CAD and NZD are leading the charge as the strongest, while the EUR, JPY and USD are bunched together as the weakest.  

Risk on flows once again

Looking at the ranges and changes, the action is in the USDCAD, AUDUSD and NZDUSD.  They are trading at extremes now  (lower USD). The USDCAD and AUDUSD have trended from the start. The NZDUSD moved lower first before joining the “risk on” party.  As for the EUR, JPY and CHF, they are not moving vs the greenback (or the movement they have, is up and down choppy) they are hanging within 8 pips of the closing levels at the NY morning snapshot.  The GBPUSD has continued it’s move higher (after yesterday’s trend move higher in the European and NY sessions).  That pair, however, has reached the 200 day MA at 1.2996 and has chopped above and below the MA over the last 4-5 hours of trading.  

The ranges and changes for the major currency pairs
In other markets:

  • Spot gold continues to not follow the risk on flows seen in the stock market but sees and appetite from traders into the relative safety of the precious metal. It is up $ 9.66 or 0.53% at $ 1827.51
  • WTI crude oil futures trading higher by $ 1.16 or 2.84% and $ 41.97. The September contract is also up $ 1.16 or 2.84% at $ 42.08. The price of the August contract has moved above its 50% retracement of the years trading range at $ 41.25. Bullish

In the premarket for US stocks the futures are implying a higher opening on risk on flows

  • S&P index is trading up 26 points
  • NASDAQ index is trading up 101 points
  • Dow industrial average up 239 points

In the European markets, the major indices are higher joining the rally in risk on flows

  • German DAX, +1.77%
  • France’s CAC, +1.25%
  • UK’s FTSE 100, +0.48%
  • Spain’s Ibex, +1.57%
  • Italy’s FTSE MIB, +1.89%

In the US debt market, yields are marginally higher with yields up lesson 1 basis point across yield curve:

US yields are marginally  higher

In the European debt market, the benchmark 10 year yields are trading mixed with Germany, France yields marginally higher, and UK, Spain, Italy, and Portugal marginally lower. The biggest mover is the Italian yields which are down -2.5 basis points on the day (although Italian yields are also the highest by far).

European yields are mixed

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