ForexLive European FX news wrap: Risk-off wave strikes markets

Headlines:

• The one word that markets are concerned with right now
• Safety flows dominate the major currencies bloc on the day
• Equities sour further in European morning trade
• What are the main events to look out for today?
• BOJ reportedly mulls reducing bond purchases as early as June meeting
• BOJ’s Himino: It is inappropriate for monetary policy to target exchange rate
• Germany May unemployment change 25k vs 7k expected
• Switzerland May CPI +1.4% vs +1.4% y/y expected

Markets:

• JPY leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.4%
• US 10-year yields down 1.6 bps to 4.386%
• Gold down 1.0% to $2,327.48
• WTI crude down 1.5% to $72.92
• Bitcoin down 0.3% to $68,911

The dollar is finding a footing in the new day, as risk sentiment in markets soured in European trading. There wasn’t a direct trigger but I would argue that softer US data as of late is starting to bring about stagflation risks. And that is seeing market players start to stand up and take notice.

Equities sold off right from the onset with European indices bordering on 1% losses across the board. S&P 500 futures fell from flat levels to be down by 0.6% before pulling back a little.

In the bond market, 10-year yields continue to retreat in a fall to 4.386% today. For some context, it was as high as 4.638% just last week.

Going back to FX, USD/JPY fell from around 156.40 in Asia all the way down to 154.70 at the lows for the day. The pair is now still down 0.6% but holding just above 155.00. That makes the yen the lead gainer on the day.

The dollar is seen gaining elsewhere with EUR/USD down 0.4% to 1.0860 and GBP/USD also down 0.4% to 1.2750 on the day. The commodity currencies are the laggard amid the dour risk mood. USD/CAD is up 0.4% to 1.3680 while AUD/USD is down 0.7% to 0.6640 currently.

The flight to safety also saw a selloff in commodities with oil back down under $73 and gold down 1% to $2,327 levels at the moment. The big drag though is in silver, as the precious metal is down over 3% in a fall back under the $30 mark.

It is on to the US JOLTS job openings next.

This article was written by Justin Low at www.forexlive.com.