Forex news for North American trading on March 23, 2021
- Fed's Brainard says expects to see transitory increases in inflation
- S&P and Nasdaq give back yesterday's gains. Russel 2000 tumbles
- Feds Brainard: Activity has picked up, job market is more positive
- Crude oil futures settles at $57.76
- BOC Gravelle Q&A: Buying equities in a crisis, would be a "break the glass" move
- WTI crude oil futures trade to new session lows and lowest level since February 12
- Feds Brainard: Fed forming new committee to monitor climate risks
- BOC announces discontinuation of market functioning programs for COVID
- CDC Covid cases rise to 55,902 vs. 39,466
- US treasury sells $60 billion of two-year notes at a high yield of 0.152%
- Powell: We have tools to deal with inflation
- Feds Bostic: Expects increase inflation to be temporary
- US February new home sales 775K vs 870K expected
- Richmond Fed manufacturing index for March 17 versus 16 expectations
- AstraZeneca to reissue vaccine data "within 48 hours" after questions raised
- The sour mood in FX isn't so sour in US equity futures
- US tax hike talk continues to percolate
- Bank of Spain cuts economic outlook
- US Q4 current account -$188.5B vs -$188.0B expected
- The JPY is the strongest and the NZD is the weakest as the NA traders enter for the day
- Fed's Kaplan: Jury is out on whether we'll see sustained price rises
The price of crude oil has tumbles by over $4 dollars or -6.7%. The fall is being attributed to expectations for lower demand particularly in Europe as a result of the increasing lockdowns from new variants and increasing case trends. The all important summer travel seasons is ahead and if lockdowns persist, lower demand is the fear. The price is now down over $10 from the March 9 high and also now below the 50% of the 2021 trading range (below $57.67). The next target is the $57 which is near a swing low from February 12. The rising 100 day MA for a continuous active contract is down at around $51.56. Food for thought.
The fall in oil helped to keep interest rates lower for the 2nd consecutive. The 10 year yield is down around 7.5 basis points after falling around 3.5 basis points yesterday. The high yield reached 1.75% on Thursday last week, and as low at 1.613% today. Moreover, the yield fell below both the 100 hour MA (at 1.68%) and 200 hour MA (at 1.63%) today in the process. The swing high from February reached 1.61%. With the low yield today just above that level today at 1.614%, getting below that level is the next target if the move lower is to continue.
A week ago, the stock market would have been cheering the fall in yield and oil inflation. Today, the stocks did not like so much the idea of increasing Covid variants and with it lockdowns working their way across the pond, and mucking up growth prospects. The major US indices all moved lower today, with the Russell 2000 index falling the hardest (-3.58%).
How did it all play out in the forex?
With risks increasing, the USD and JPY were the runaway strongest. On the other ends of the spectrum, the NZD and AUD were the runaway weakest (with the NZD really falling). The NZDUSD trended lower today with little in the way of any corrections along the way. The pair is lower by 2.32%. Only the NZDJPY moved more (it fell -2.56%). For the NZDUSD it fell back below the 100 day mA at 0.7112 and by the close was trading below the 0.7000 level for the first time since the end of November.
The dollar rose by 1.58% vs the AUD and by 1.16% vs the CHF. Like the NZDUSD there was little in the way of corrections in these currency pairs.
For the AUDUSD it fell to the lowest level since February 5th and is moving closer to its 100 day MA at 0.76019. The low reached 0.76168 - just above that key level.
For the USDCHF it moved outside a ceiling area at 0.9318 to 0.93244 and is trading at 0.9338 at the close. That ceiling stalled the high since March 10. Getting and staying above that area in the new day will keep the buyers in control.
