Profit taking, FOMC event and poor German trade data hit risk
- Germany heading for biggest slump since the end of WW2?
- Harvard Research suggests COVID-19 outbreak started in August
- ECB's Rehn on 'Fallen Angels'
- Eurozone Q1 revised GDP -3.6% vs -3.8% q/q expected
- UK Finance Minister on UK loan latest
- Currency relative performance in Xenith
- French Finance Minister declares state of emergency for Aerospace industry
- European equity markets open lower
- How do stock markets react to civil unrest?
- France April trade balance -€-5.02 billion vs -€3.34 billion prior
- Japan May preliminary machine tool orders -52.8% vs -48.3% y/y prior
- Germany April trade balance €3.2 billion vs €11.6 billion expected
- Switzerland April unemployment rate 3.4% vs 3.5% expected
- Oil hoping for fast rise in demand
- JPY the strongest and AUD the weakest currency
- Asian indices mostly higher
Markets
- CHF leads, AUD lags
- Dax -1.88%
- Gold +0.56%
- WTI crude up -1.52%
The session started very similarly to yesterday as it was another quiet data front. However, the risk tone tilted off at the start of the session and slid quite quickly after poor German trade balance data.This was the worst decline since 1990 and shows how hard it will be for the German economy to bounce back. Not long after the data the risk tone accelerated to the downside taking down bond yields, copper prices and crude prices. The JPY came into the session strong from the Asian handover and maintained its strength due to its safe have status alongside strength in the CHF and the USD.
There was a lively discussion in the risk off thread about why markets have turned risk off. Some of the moves are likely to be profit taking ahead of the FOMC and the antipodean currencies have retreated from their most recent highs simply as a logical retracement. The NZDUSD fell from its 4 1/2 month high, just as its economy gets virtually fully moving again. Well, buy the rumour and sell the fact and all that. In any case a retracement at some stage was inevitable.The data was poor in the session too and the FOMC is now a little more unknown after the NFP data from last Friday. A breather seems normal and I found it hard to see an obvious trade for the session, so that kept me on the sidelines and I expect many more felt the same. All eyes on the FOMC to give some direction again.
So, it has been a pleasure being with you all again and thank you to for the usual blend of banter and insights in the comments. It certainly enriches the posts and provides an excellent source to sharpen my thinking of what is going on. Not a whole lot over the last two days though. This is my last session today and Justin is due to return tomorrow, so I bid you farewell for now.
