Forex news for North American trading on February 10, 2021.
- Dow industrial average the only positive story today. Closes at a record high
- WTI crude oil settles at $58.68, up 0.6%
- Powell Q&A: This is a different kind of crisis, economy was working fine beforehand
- Powell: US is 'still very far' from a strong jobs market
- US January monthly budget statement -$162.8B vs -$150.0B expected
- Germany to extend lockdown until March 7 - report
- US treasury sells $41 billion of 10 year notes at a high yield of 1.155%
- Boris Johnson: We should start to think about covid vaccine as regular jab
- European equity close: Moderate declines
- BOC's Lane says private sector digital currencies are deeply flawed
- US weekly oil inventories -6645K vs -800K exp
- US December wholesale sales +1.2% vs +0.2% prior
- The weaker CPI sets the high ceiling for the USDJPY.
- Lagarde: Hopes that digital euro will be ready in about 4 years
- US January CPI +1.4% y/y vs +1.5% expected
- ECB's Lagarde: Inflation not converging to goal over medium term
- The GBP is the strongest and the NZD is the weakest as NA traders enter for the day
In other markerts:
- spot gold is trading up $4.29 or 0.23% at $1842.61
- spot silver is down $0.25 or -0.91% $27.01
- WTI crude oil futures are down $0.01 or 0.02% of $58.35
- Bitcoin is trading down $2400 or -5.1% at $44,900.
Today, the main events in the North American session were focused around US CPI and comments from Fed chair Powell is speaking at the New York economic club. Both were tame.
CPI came in 0.1% lower on the headline and the core measures which is not a lot, but for a market that is suddenly concerned about inflation (despite comments from Fed officials that view inflation as transitory), it was a relief.
The Fed chair speaking at the New York economic club, was the other key event for the day. Like the CPI, his comments were tame as well (i.e. dovish). There is a long way to go until the economy returns to full employment and with inflation subdued, and with the Fed willing to let it run hot, stimulus will remain.
The news helped to send yields lower today with the 30 year down nearly 4 basis points to 1.908%. The 10 year yield is also lower by 3.4 basis points. Below are the ranges and changes for the yield curve today.
In the stock market, the Dow industrial average was the only major index to close higher today. The NASDAQ fell by -0.25%. The Russell index was the worst performer -0.72%. Profit takers enter the market shortly after the opening sending stocks lower. Although there was a rebound into the early New York afternoon, gains were later erased. The market seems poised for some consolidation/correction. In the European markets today, the major indices closed lower after also giving up earlier gains
In the forex, the price action was relatively modest and up and down. The EURUSD, USDJPY, USDCAD all closed within 10 pips of the close from yesterday. The NZDUSD moved the most with a -30 decline on the day. Overall, the CHF is ending the day as the strongest of the majors, and the NZD is the weakest. Despite the tame inflation and Fed, the USD is ending marginally higher/mixed with most of the gains vs. the AUD (+0.23%) and NZD (0.41%). The dollar was mostly lower vs. the CHF (-0.21%) and GBP (-0.11%). It was near unchanged vs the EUR, JPY and CAD.
A technical look at some of the pairs going into the new trading day shows:
- GBPUSD: The GBPUSD trade to the highest level since the week of April 22, 2018, but close below a broken trend line which is a little bearish tilt going into the close. The New York session low of 1.3826 was tested. Get below that level in the new trading day could see more corrective profit-taking with the 30.2% retracement of the week's trading range at 1.37943 as the next downside target. Although off the highs, the pair still closed higher for the 4th consecutive day. Can the market make it 5 tomorrow?
- EURUSD: The EURUSD could only muster a range of 35 pips today which is 1/2 of the average of 70 over the last 22 trading days (around a month of trading). The pair's high in the North American session could not take out the early European high at 1.21435, nor get to the next swing target at 1.21507 to 1.21552. On the downside, the pair was able to stay above the underside of the broken trend line on the hourly chart which currently comes in at 1.2108. A move below that level and back below the 1.2098 to 1.2100 area in the new day is needed to tilt the bias more to the downside.
- USDJPY: The range for the USDJPY was set before the New York open. On the downside, the London session low tested its 100 day moving average at 104.38 and bounced. The London session high stalled against its 38.2% retracement of the move up from the January 21 low to the February 5 high (and a key swing area near that level as well) at 104.83. IN between sits the 50% midpoint of the same trading range at 104.542. IN the new trading day, move below the 50% and then the 100 day moving average would increase the bearish bias. If on the other hand, the price moved above the 38.2% retracement, traders will be looking toward a retest of the 200 and 100 hour moving averages at at 105.035 and 105.08 respectively as the next upside target. Flip a coin or pick a side.
- USDCHF: The USDCHF fell below a key swing area between 0.89169 and 0.89212 today (and stay below that level on a corrective test. If the price is able to stay below in the new trading day, the bears are in control. Move above and sellers will be disappointed and there should be buying toward the midpoint of the move up from January 22 at 0.89413. On the downside, the next target area comes in at next 0.8868 to 0.8873. Move below that and traders will start to look toward 0.8850 and the January 22 low at 0.88379
