US Treasury and equity markets are taking center stage this morning as the DOW looks to trade lower after yesterday’s negative move. Concerns regarding the US economy as well as political problems in Argentina and Hong Kong have seen traders move towards safe haven assets such as U.S. bonds, gold and the Japanese Yen. The US yield curve is at its flattest level since 2007. The Argentine peso collapsed yesterday after President Macri lost by a larger margin than expected in presidential primaries.
European stocks were trading lower this morning as the Italian senate will meet sometime today to announce the date for a motion of no confidence in the government. EUR/USD trading lower level after the German ZEW Economic Survey number fell to -44.1 for August. The expected number was -28.1, after the July number was -24.5. Global economic concerns are pressuring the Eurozone economies and this will put a further strain on the German economy.
GBP/USD is trading quietly this morning as a rise in UK wages was offset by a rise in UK unemployment. GBP remains on the defensive as the market concentrates on Brexit news. For the moment the GBP is on the backburner as traders remain focused on the trade conflict between the US and China.
The safe haven JPY remains well bid, enjoying gains against the EUR and GBP, while USD/JPY looks to move lower. We may see this movement continue as trade war concerns continue.
CAD trading in a quiet range, supported by positive oil news. Kuwait’s oil minister commented that Kuwait is fully committed to supporting a cut in oil production to support crude oil prices. Trade war concerns remain on “commodity” currencies and this could prevent the CAD from strengthening further.
The People’s Bank of China set the Yuan midpoint higher for the fourth consecutive day at 7.0326 per dollar.