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Stock markets decline, USD slips on the news from China

Summary:

  • China limits purchasing of the US treasuries

  • Ethereum retreats from the fresh all-time highs

  • Government report on oil inventories to take the stage later on

So far the biggest surprise today came from China as the country decided to limit or even halt purchasing of the US treasuries and as a result euro advances against the greenback. European benchmarks remain on the back foot following a mixed session in Asia. Japanese yen is one of the strongest currencies in the G10 basket gaining against all its peers. WTI prices continue their rally moving close to $63.50. Gold prices edge higher amid USD weakness.

The macroeconomic calendar is relatively empty today but it does not mean calmness across financial markets. While the US dollar was slowly recouping its losses Bloomberg reported that China’s officials have recommended slowing or halting purchases of US government bonds. In effect, the US 10Y yield soared roughly 5 basis points reaching almost 2.6%.

Major cryptocurrencies were somewhat more volatile over the course of the past hours. In effect, Bitcoin deepened its decline, Ripple bounced back from a key support while Ethereum retreated from its fresh all-time high placed above $1,300. Nevertheless Bitcoin could come back to the spotlight again given the newest remarks coming from JPMorgan CEO.

Global equity markets along with oil prices have seen an incredible increase of late mainly on the back of uninterrupted optimism regarding the global economy. However, even as Wall Street saw another record close on Tuesday Asian investors were a little bit more cautious.

A session in Asia resulted in moderate moves on the FX with the Japanese yen on the front line again as JGB yields increased. Equities were mixed following another record setting session on Wall Street where a pace of increases decelerates and there are voices that correction could be under way.

In today’s economic calendar we still have a few quite important prints. In the early afternoon data concerning Canadian building permits is scheduled for release giving CAD a chance to resume its strengthening. In the evening a government’s data on US oil inventories will be published thus increased volatility on the oil market may surface. Apart from that throughout the afternoon some of the Fed central bankers will deliver their speeches.

 

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