- US advance March goods trade balance -125.3B vs -106.3B expected
- U.S. Treasury auctions off $49 billion of 5 year notes at a high yield of 2.785%
- The final Atlanta Fed Q1 GDPNow estimate is +0.4% (the report is due tomorrow)
- EIA US weekly crude oil inventories +692K vs +2000K expected
- US March pending home sales -1.2% vs -1.6% expected
- US wholesale inventories for March 2.3% versus 1.5% estimate
- German economy min: Higher inflation and slower growth is price to support Ukraine
Markets:
- Gold down $20 to $1885
- WTI crude up 35-cents to $102.05
- S&P 500 up 9 points to 4183
- US 10-year yields up 5 bps to 2.82%
The euro fell through the pandemic low of 1.06 to the lowest levels since 2017. It has been caught in the wave of US dollar buying on the combination of widening yield spreads, risk aversion and the anticipated growth slowdown in Europe. Today's comment from the Germany economy minister summed it up, with him saying they're sacrificing economic growth for the fight against Russia. The latest trigger was the looming cutoff of natural gas for customers who won't join the ruble-payment scheme along with talk of a gradual oil embargo. The peak of the selling today was into the London fix, when it hit 1.0514 and there was a 40-pip recovery from there.
The pound also continued its swan dive and bottomed into the fix. It finally found some bids just above 1.2500 and bounced to 1.2576 before fading late. It's tracking the risk trade closely.
Stocks were volatile today with futures modestly higher ahead of the open followed by a big jump, then a sharp negative turn followed by another huge bounce and then settling basically unchanged. FX bit on a few of the moves but to nowhere near the extent that stock market volatility might indicate. USD/JPY was strong, climbing to 128.61 at the high but still 100 pips from last week's peak.
The commodity currencies also bottomed into the fix. Citi has been talking about USD buying into month end so we will be keeping an eye out for more of the same in the day ahead. The yen will be in particular focus with the BOJ decision.
