Forex news for North American trading on January 27, 2021
- Get ready for a big slate of tech earnings after the bell
- Powell Q&A: We are a long way from a full recovery but fiscal response has been strong and sustained
- Powell opening statement: Several developments point to a better outcome later in the year
- The Federal Reserve statement from the January 2021 meeting
- FOMC leaves rates and pace of bond purchases unchanged, as expected
- Federal Reserve preview: There's only one thing on the market's mind
- European shares end sharply lower. German DAX falls -1.6%
- EIA weekly US crude oil inventories -9910K vs +1500K expected
- All eyes on GME and AMC but Microsoft is more telling for the broader market
- Johnson imposes 10-day hotspot arrival quarantine. Hopes to open schools in March
- US December prelim durable goods orders +0.2% vs +1.0% expected
- The USD is the strongest and the AUD is the weakest as NA traders enter for the day
The US stocks tumbled lower today as the FOMC/Powell maintains the status quo and signals concerns about the economy. The markets may also been influenced by the increased volatility from that meme stocks and potential selling from hedge funds in the "other stocks" to cover losses (just throwing that theory out there). Of particular concern was that Microsoft which had strong earnings after the close yesterday and surged 6% in after hours trading, is closing the day near unchanged. Tesla, Facebook and Apple report after the close. Meanwhile, GameStock is still up 120% - on the day, AMC is up 290%, Blackberry is up 33%, and Bed, Bath and Beyond is up 37.84%.
More specifically some of the highlighted comments from Powell included:
- We will be patient and won't react to small, transient inflation increases
- We think it's very unlikely that anything we see will result in sustained problematic inflation
- It's too early to focus on tapering dates. We'll signal that well in advance of what will be a 'pretty gradual' taper
- Any focus on an exit is premature
- I'm much more worried about falling short of a complete recovery than inflation
- Removal of 'medium term' from statement regarding 'considerable risks' is because the risks are now more in the near-term but highlights that overall outlook is better
- Banks are not experiencing the kinds of losses they expected and they're reversing those reserves
Honestly, the comments are largely in line with recent comments. Nevertheless, the markets going into the decision and presser were going in bearish and continued in that direction.
The major indices are showing:
- S&P index -2.57%. The index closed below its 200 hour moving average at 3764.22. That is the 1st close below the 200 hour moving average since November 3
- NASDAQ index fell -2.61% and also closed right at its 100 hour moving average at 13270.598 after trading to a low of 13192.91
- The Dow industrial average closed down -633 points or -2.05%.
In the forex market, the sharp fall in the US stocks sent the USD higher. The greenback was the strongest of the majors. The CHF was also a vessel for safe haven flows. The AUD and NZD were neck and neck for the weakest of the majors and risk off flows sent the commodity currencies lower. The CAD was also lower.
In other markets as the day comes to a close:
- spot gold is trading down $-9.42 or -0.51%
- spot silver is down $-0.29 -1.15% of $25.17
- WTI crude oil futures are trading near unchanged at $52.56 up $0.05 on the day
