Forex news for North American trading on March 3, 2021
- Sen Manchin largely endorses stimulus bill
- Fed's Harker: If rate hike happens, it may be toward end of 2023
- Bitcoin rises above $50,000 as it shakes off worries elsewhere
- Fed's Evans: Yields increasing due to real factors, like vaccines
- Crude oil futures settle at $61.28
- Fed's Beige Book: Economic activity expanded modestly from January to mid-February
- Fed's Evans: Unemployment rate masks reduction in participation
- US 10 year yield pushes off 200 hour MA today
- European shares end with mixed results
- Trudeau: Now isn't the time to pull back on support for workers or business owners
- Gold falls to lowest since June in test of $1700
- Fewer Americans will get $1400 checks with changes to income thresholds
- US weekly EIA energy inventories +21,563 vs -1300K expected
- ECB's de Guindos: 2021 growth likely close to December projections
- OPEC+ JMMC meeting ends without policy recommendation
- US February ISM services 55.3 vs 58.7 expected
- Markit US February final services PMI 59.8 vs 58.7 expected
- ECB's Weidmann: Size of yield moves not 'particularly worrisome'
- Rise in Treasury yields saps US equity futures
- Canada January building permits +8.2% vs +2.5% expected
- The GBP is the strongest and the CHF is the weakest as NA traders enter for the day
- US February ADP employment +117K vs +200K expected
- UK's Sunak: Expects economy to return to pre-COVID levels in the middle of next year
The rotation continues in the US equity markets as Nasdaq indices tumbled by -2.7% (the Nasdaq 100 was down nearly 3%). The NASDAQ index at its worst 2 day decline in over 6 months. The Dow was the best performer helped by financials, Boeing and Chevron (oil was higher today), but still closed at session lows in a late day sell off. The S&P also closed at session lows.
Below are the % changes and ranges for the major North American and European markets.
The rise in US yields is being blamed for the declines in stocks. The 10 year yield was the biggest mover with a gain of 7.2 basis points. The high yield reached 1.495% just shy of the 1.50% level. That is still short of the spike high seen last Thursday at 1.6085%, but it is above the 38.2% of the move down from the October 2018 high. That level comes in at 1.439%.
The forex market saw the GBP and the USD posting the biggest gains on the day. The NZD and CHF were the weakest.
The USDCHF is closing near the session highs as it pushed away from its 200 day MA. Yesterday, the USDCHF tested that key MA at the day lows, and pushed higher for most of the day today. The pair is looking to test the 0.9200 level for the first time since November 2, 2020.
For the NZDUSD and the AUDUSD, each open the New York session near lows, saw modest retracements of the Asian and early European declines, before moving lower into the close. The pairs remain above the days lows but closer to those levels as investors exited risk currencies in the favor of the US dollar and GBP.
For the EURUSD, it had the price action like the AUDUSD and NZDUSD and sniffed the falling 100 hour MA on the morning rise in the NY session (the 100 hour MA is at 1.20805 (the high price in the NY session reached 1.20800), but sellers pushed the price of the highs and is closing near 1.2064.
Fundamentally today, the ADP employment jobs adds came in less than expected at 117K vs 225K estimate. The important Bureau of Labor Statistics report will be released on Friday with expectations for a 200K increase.
The service sector ISM index came in much weaker than expected 55.3 vs. 58.7 estimate. Prices paid rose sharply to 71.8 vs 64.2. New orders fell sharply to 51.9 vs 61.8 prior. The employment index also fell to 52.7 vs 55.2 prior. That is pretty much the worst case scenario for equities and bonds and certainly helped to define their day's. They also kept the dollar more bid overall.
From the Fed today, Fed's Evans talked more optimistically about inflation then what the bond market implied. He said:
- Doesn't see a great risk of inflation rising too quickly
- Our experience has been that inflation doesn't respond to even the most vibrant labor market
- I really want to see above 2% inflation before I even think about raising rates
- It would be extraordinary if inflation got up to 3% but if it did, that would not be a real problem
While Feds Harker added:
- If rate hike happens, it may be toward end of 2023
Nevertheless, when the bond market and stock markets have an idea and positions are offsides, sometimes words don't matter.
