Thursday, September 7, 2023

Capital Markets: "Battle for $1.07 in the Euro"

 From Marc to Market:

Overview: Despite disappointing German industrial output, where the 0.8% decline was twice expectations, the euro is holding above $1.07, where large options exist that are expiring over the next few sessions. The greenback is consolidating against the Japanese yen, where the fear of intervention has increased. Sterling remains on its back foot after yesterday's seemingly dovish comments by Bank of England Governor Bailey. Emerging market currencies are mostly lower, though of note, the Mexican peso has reversed earlier losses and is now the strongest, up 0.3% in Europe. The slowing of the decline of both imports and exports failed to help the Chinese yuan, which has extended its recent losses.

The MSCI Asia Pacific Index fell for the third consecutive session. All the large bourses are in the red but India. Recall that a six-day advance ended Monday. Europe's Stoxx 600 is trying to snap a six-day slide, but it may be difficult if the US market extended the retreat seen in electronic trading. Benchmark 10-year yields are mostly 2-3 bp lower in Europe, the Gilt yield is off seven basis points. The 10-year US Treasury yield is down a little more than a single basis point to slightly below 4.27%. After falling nearly 2% in the past four sessions, gold is stabilizing in a narrow range above $1916. October WTI is also consolidating and is inside yesterday's range, which was inside Tuesday range. It is in a little more than a dollar range below $87.75 today. API reportedly estimated a 5.5 mln barrel drawdown, which is nearly twice what is expected from today's EIA estimate....