Headlines:
- Dollar in control to start the new week
- European benchmark Dutch TTF gas futures open up 26% higher to start the week
- Russia says Europe is to blame on Nord Stream shutdown
- PBOC cuts FX reserve ratio by 200 bps to restrain yuan weakness
- Eurozone August final services PMI 49.8 vs 50.2 prelim
- Eurozone September Sentix investor confidence -31.8 vs -27.5 expected
- UK August final services PMI 50.9 vs 52.5 prelim
- Switzerland Q2 GDP +0.3% vs +0.4% q/q expected
Markets:
- USD leads, EUR lags on the day
- European equities lower; S&P 500 futures flat
- Gold up 0.1% to $1,712.93
- WTI crude up 3.2% to $89.62
- Bitcoin down 1.4% to $19,681
As Russia switches off the gas on Europe, energy prices in the region are sent jumping in the new week. We're not revisiting the highs in the past two weeks but the surge higher is notable as concerns continue to grow about the energy crisis in Europe. For some context, the benchmark Dutch TTF futures are up 30% to €272 MW/h.
Regional equities are weighed lower on the worries with the DAX bearing the brunt of the declines, down nearly 3% on the day. European bond yields are also lower as the negative development weigh on sentiment.
In FX though, the dollar continues to reign supreme with EUR/USD briefly trading to fresh 20-year lows below 0.9900 before keeping 0.3% down around 0.9920 currently. GBP/USD continues to be pressured below 1.1500, though the pair is holding off the lows for now near the figure level.
USD/JPY is also sticky above 140.00 as buyers look to build on a firm extension above the key psychological level while AUD/USD is down 0.3% to just below 0.6800 as the downside pressure builds amid a stronger dollar.
In the UK, Liz Truss is officially named the next UK prime minister but she will have a tough task ahead of her in trying to do something about the flailing economy and the energy/cost-of-living crisis that beckons.
