Forex news for NY trading on March 10, 2020
- Another huge move in the last hour for US stocks
- Australian recession forecast (ICYMI)
- Massachusetts reports 51 new coronavirus cases, declares public health emergency
- Big move higher from the US dollar today, what's happening
- Macron: Budget constraints shouldn't prevent virus decisions
- Crude oil futures settle near highs for the day
- Trump tells GOP he wants the payroll tax waived through the election
- Bailout nation takes flight
- White House is likely to pursue federal-aid for shale companies
- Italy death toll rises to 631 from 463 on Monday
- US treasury auctions off $38 billion of 3 year notes at 0.563%
- European equity close: Gains turn into losses
- Trump has discussed 90-day suspension of payroll tax
- Saudi Arabia makes special supertanker bookings to flood US market with oil
- Trump says administration will be helping cruise line industry and airlines
- House Democrats say stimulus should address paid sick leave, unemployment insurance
- Spain bans events with more than a 1,000 people in Madrid, elsewhere; Switzerland closes border
- US suspends upcoming 12 million barrel sale from SPR
- Trump takes another swipe at the 'pathetic' Federal Reserve
- Netherlands reports 382 confirmed cases of coronavirus
- Spain reports 1622 total coronavirus cases
The "pathetic Fed" (the President's words today) did there thing last week by cutting rates by 50 basis points (with more to come?). Washington DC lawmakers may be coming to the rescue with the Presidents propose cut in payroll tax for both the employer and the employee. Other ideas including a bailout of the airline and cruise industry, paid leave of absence as a result of closures and bailout for the shale industry which got in the crosshairs of the Saudi vs. Russia oil war.
Payroll taxes are paid on the earnings up to $132,900 and are taxed at 6.2% for the employee and 6.2% for the employer. Self-employed workers pay 12.4%.
Lowering the % for both employer and employee as a stimulus would depend on what the % reduction is set at. At the end of 2010, President Obama cut payroll tax 2%. Estimates of a similar cut would amount to $150 billion stimulus to the employee and the same $150 billion stimulus to the employer. That is pretty healthy for a problem which according to the President is made up by fake media. I find it interesting as well that Pres. Trump is pulling from the Obama administration's stimulus bag of tricks. Perhaps it is the President's best chance of prodding Democrats to go along with the plan. What we know however is in times of crisis, bipartisan stimulus is easier. No politician likes to be the one that does not provide relief to a constituency. However be aware that the Democrats (and even some Republicans) may still balk at the idea (it benefits the rich more) given the cost especially with a budget that is already heavy on entitlement costs. Not collecting premiums to fund those ballooning entitlements just does not seem right.
Other proposals floated today included:
- Relief for cruise industry and airline industries
- Bailout of shale producers.
- Democrats proposed extending unemployment benefits and providing for unpaid leave for low income earners.
In any case, the fiscal stimulation news helped to stimulate the US stock market. The major US indices soared into the close with the major indices closing up 4.89 to 4.95% on the day (and at session highs). European shares did not fare as well, but will likely have some catch up to do in early trading tomorrow. They all closed near session lows.
In the US debt market, yields move back to the upside after yesterdays plunge lower. The 10 year yield traded as low as 0.3% yesterday it is ending the day at 0.797% up 25.6 basis points on the day. The yield curve also widened with the 2 -10 year spread up to 26.44 basis points from 15.97 basis points yesterday .
In the forex market, the dollar was mostly higher led by a surge in the USDJPY.
The USDJPY had a low to high trading range of near 400 pips, and broke above it's 100 hour moving average at 104.92 for the 1st time since February 21. In the new trading day, a topside trend line comes in at 106.10. It's 200 hour moving average is higher at 106.50. It will take a move back below the 100 hour moving average to weaken the technical bias in the new trading day.
The EURUSD was another pair that was able to close below its 100 hour moving average for the 1st time since February 21. The 100 hour moving average for the the EURUSD comes in at 1.1300 (and moving higher). The price closed the day at 1.1280. If the pair can stay below that moving average, the corrective bears will look toward the 200 hour moving average at 1.11939 (and moving higher) in the new trading day.
The GBPUSD had an oversize trading range of about 246 pips and like the EUR and the JPY closed at low levels vs the USD. For the GBPUSD, the price closed below its 200 hour moving average at 1.29063 with the next downside target against a lower trend line at 1.28595 if the 200 hour MA can remain broken in the new day.
