Morning wrap (07.09.2022)

• US indices finished yesterday's trading lower. S&P 500 dropped 0.41%, Dow Jones moved 0.55% lower and Nasdaq declined 0.74%. Russell 2000 dropped 0.96%

• Risk-off moves on the stock markets are accompanied by pick-up in US yields. 10-year US yield reached 3.36% - the highest level since mid-June 2022

• Downbeat moods extended into the Asian trading session. Nikkei dropped 0.8%, S&P/ASX 200 moved 1.4% lower and Kospi plunged 1.5%. Indices from China traded lower as well

• DAX futures point to a lower opening of the European cash session

• New UK Prime Minister Liz Truss signaled that she will not confront with the European Union over North Ireland protocol in the coming weeks

• Media reports suggest that China will extend lockdown in Chengdu city as cases in the area continue to rise

• Chinese exports increased 7.1% YoY in August (exp. 13.0% YoY) while imports were 0.3% YoY higher (exp. 1.8% YoY). Trade balance for August came in at $79.39 billion (exp. $93 billion)

• Australian GDP grew at a pace of 0.9% QoQ in Q2 2022 (exp. 1.2% QoQ). On year-over-year basis growth reached 3.6% YoY (exp. 3.8% YoY)

• US dollar remains strong, supported by pick-up in yields. USD strength is especially clearly seen compared to Asian currencies. USDJPY jumped above 144.00 while USDCNY is closing in on 7.00

• Cryptocurrencies succumb to overall risk-off moods with Bitcoin dropping below $19,000. Ethereum trades slightly above $1,500, dropping over 4% on the day

• Oil deepens declines, erasing all of the gains made following OPEC+ output cut. Brent drops 1.7% and trades just slightly above $91 per barrel

• Precious metals pull back under pressure from strong USD. Gold and silver trade around 0.4% lower at press time

US dollar leads on the FX market this morning. Strong pick-up in yields is providing support for the greenback, allowing it to reach multi-year highs against other major currencies. Source: xStation5