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The EUR is the strongest and the JPY is the weakest as the NA session begins

The strongest to weakest of the major currencies

The EUR is the strongest and the JPY is the weakest as the North American session begins.

Yesterday the markets took on a view that the retail giant Target inventory glut may foreshadow a fall in inflation as they and other retailers are forced to cut prices due to a sudden inventory glut. Today, the focus is back on inflationary concerns.

  • Yields are higher,
  • stocks are modestly lower.
  • Oil is higher.
  • The USD is higher.

Within the forex complex, the USDJPY continues its run to the upside (up 1.12% on the day). Yesterday, the pair rallied in the Asian session, but they consolidated/corrected about 61.8% of the day's range before bouncing modestly. Today the pair moved above the short term 100/200 MAs on the 5 minute chart and has trended higher. Looking at the 5 minutes chart below, the bounce off the 100 bar moving average was a key clue for buyers to accelerate the trend to the upside. The pair's 100 bar moving average (blue line in the chart below), lags behind but would need to be broken to the downside to give the sellers some comfort. Absent that, and the buyers are still in firm control.

USDJPY trends higher

The  EURUSD  is higher against all the major currencies ahead of the ECBs interest rate decision tomorrow. The central bank is expected to keep rates unchanged as they want down the asset purchase program and look to launch rate hikes in July. Markets will be focused on whether the hint toward a 50 basis point launch. Yesterday, the Reserve Bank of Australia increased rates by a higher than expected 50 basis points. Overnight, the Reserve Bank of India raise rates by a higher than expected 50 basis points to combat inflation. The EURJPY is the strongest of the  currencies  this morning with a gain of 1.45%.

The Fed is expected to raise rates by 50 basis points at the next 2 meetings at least.

The mortgage application data in the US fell mother -6.5%. That is a 22 year low. The mortgage rate increased increased to 5.5% from 5.22% last week.

Today US inventory data will be eyed at 10 AM ET. With the target announcement in the rearview mirror, that data will be of interest. 4 of the last 6 months have seen gains of greater than 2% in wholesale inventories.

The US treasury will continue their auctions this week with the 10 year issue (9 year 11 month actually). Yesterday the treasury auctioned off 3 year notes and had tepid demand from international investors.

A snapshot of the markets are showing:

  • Spot gold is trading unchanged at $1851.57
  • Spot silver is down $0.27 or -1.2% at $21.97
  • WTI crude oil is trading up $1.37 at $120.80
  • Bitcoinis trading toward the middle of the wall the range seen over the last day or so. Yesterday the low reached down to 29,184 and then raced back higher toward the high at $31,536. The current prices near the middle of that range at $30,392

In the premarket for US stocks, the futures markets are implying a lower level, after the major indices all moved higher yesterday

  • Dow is trading down -125 points after yesterdays 264.36 rise
  • S&P index is down down 14 points after yesterdays 39.23 point rise
  • NASDAQ index is down 34 points after yesterdays 113.86 point rise

In Europe: the major indices are lower after solid gains yesterday

  • German DAX is down 87 points or -0.6% at 14468.81
  • France's CAC down down 52.62 points or -0.81% of 6447.74
  • UK's FTSE 100 is down -44.89 points or -0.59% at 7554.12
  • Spain's Ibex is down 5.3 points or -0.6% at 8836.29
  • Italy's FTSE MIB down down -127 points at -0.52% at 24242

    In the US debt market this morning, yields are moving higher with the yield curve steepening

US yields
US yields are higher

In the European, the benchmark 10 year yields are also moving to the upside. Below are the current 10 year yields at the start of the US session

European benchmark 10 year yields are higher

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