Forex news for NY trading on April 29, 2020
- NASDAQ index him him him leads the way higher on coronavirus treatment hopes
- US CDC reports total cases above 1 million
- Powell Q&A: Believes there will be a need for Fed to do more
- Powell opening statement: Economic activity will likely drop at an unprecedented pace in Q2
- Full statement from the FOMC April 2020 decision
- Federal Reserve says rates to stay at bottom until economy on track
- Fauci: Remdesivir has clear cut impact on time to recovery
- France death toll rises to 24,087, up 427
- More Fauci: FDA working with Gilead on approval for drug that would be used for hospitalized patients
- Mnuchin: Open to more money for Main Street lending facility
- Dr Fauci: Data shows Gilead drug had benefit in reducing the time to recover
- European shares end with solid gains as risk on sentiment increases
- White House Kudlow: Sees second-half growth 17% to 20%
- Crude oil inventories show a build of 8991K vs 11900K estimate
- FDA in talks to make Gilead's remdesivir available to patients as is appropriate
- US pending home sales for March -20.8% versus -13.6% estimate
- Gilead trial for Covid- 19 meets primary endpoint
- US advanced GDP for 1Q -4.8% versus -4.0% estimate
- The NZD is the strongest and the GBP is the weakest as NA traders enter for the day
It is not often that news of a drug trial takes precedence over and FOMC decision or the 1st cut of the GDP number, but that was the case today.
Just before 8:30 AM ET and the release of 1st quarter GDP, Gilead's stock was halted due to his pending. That news revolved around its Remdesivir drug. Initial trial for its drug met primary endpoint. In short, the drug proved effective in the treatment of patients with Covid 19.
Now it is not a vaccine that will prevent the Covid virus, and initial tests showed that the drug sped up the cure time from 15 to 11 days. However, it is the basis of a drug that can now be refined and tweaked, and hopefully save lives as a preventative vaccine is developed.
The news superseded the GDP data which showed a decline of a greater than expected 4.8% in the 1st quarter with consumption down a much greater than expected -7.6% versus -3.6% estimate. Pending home sales were much better as they plunged by -20.8% versus -13.6% estimate. Crude oil inventory data showed an another large build but at least it wasn't as large as expectations (+8.9 million barrels versus +11.9 estimate).
Later in the afternoon, the FOMC decision and statement was released. The statement was unique in that it didn't give a lot of forward guidance, and I don't think there is has been many that had the level of changes to the statement from one month to the next.
Later, chair Powell vowed to preserve the flow of capital into the economy, and that they would "Forcefully, proactively, and aggressively" support the lending markets, and that they would act to the absolute limit of their powers. He did have some sobering thoughts on the economy saying "we will see data in Q2 is worse than we've ever seen" and that despite the stock markets positive assessment of policy both fiscally and monetarily, the Fed chair still believes "that there will be a need for Fed to do more". He added that the Fed, as done quite a bit of thinking about what we could do in the future, but we're waiting to find out more about the economy".
Come May 8, he will have the next monthly employment report which is expected to show the unemployment rate surged to 16.3% from 4.4%. Some have 2nd quarter GDP at up to -40% annualized (-10% quarter on quarter).
Nevertheless, the focus was on the surging stock market led by the NASDAQ index which at one point was up over 4% on the day and got within 15 or so points of being unchanged on the year. At the lows the price of the NASDAQ index had declined over -32% from its February highs.
The final numbers for the major stock indices all showed solid gains both in North America and Europe. The Russell 2000 index of small-cap stocks outperformed all with a 4.83% gain. The NASDAQ index rose by 3.57%. In Europe the Spain's Ibex increase by 3.21% leading the way in Europe. Even Italy whose credit rating was downgraded at the start of the new day rose by 2.21%.
In the forex market, the flow funds moved out of the relative safety of the USD and CHF and into the "risk on" and commodity currencies. The NZD, AUD and CAD all moved higher on the day with the NZD leading the way to the upside.
Some technical levels for major pairs include:
- AUDUSD. The AUDUSD is trading at new session highs just before the day and at 0.6554 and in the process is approaching its 100 day moving average at 0.6565. The price of the pair has not breached its 100 day moving average since January 24. I would expect sellers to put up a fight near that moving average level on the 1st test
- EURUSD. The EURUSD traded up and down or most of the London/European session, but did extend higher over the last 3 hours of trading and reached 1.0885. THat was just short of the high price from yesterday at 1.0888 and the 61.8% retracement of the move down from the April high at the same level. Moving above the 61.8% retracement and staying above would be another positive step for the EURUSD bulls. However, I would not be surprised for sellers to line up against the level (with stops on a break above) in early trading, with hopes that the price rotates back to the downside.
- USDCAD: The USDCAD fell below a trendline on the hourly chart at 1.3905 in the last few hours of trading and currently trades at 1.3875 at the close. The next stop is the April low price at 1.38548 from April 13. A move below that level (and staying below) opens up the door for further downside momentum.
- GBPUSD: The GBPUSD moved to a NY session high in the last hour of trading and in the process moved above a topside trend line on the hourly chart at 1.2459 (and moving lower - highs from yesterday and today). Stay above, will earlier high for the day 1.2484. Above that is the 61.8% retracement of the move down from the April 14 high at 1.24938, and better resistance at the 1.2513-215 area.
