Forex news for North American trading on February 4, 2021
- Record closes for the S&P and NASDAQ index
- The EURUSD sits on the ledge. What if it falls off the ledge and moves lower?
- Sometimes the simple chart is the best one
- Fed's Bullard: 'Not seeing' financial stability risks rising from Fed policy
- Can't keep oil down
- Fed's Kaplan: Next 2 or 3 months will be very challenging
- German DAX for the 4th consecutive day. UK FTSE 100 lags in trading today
- USD: Stay prudent until the noise passes - Citi
- Fed's Bostic: Not my expectation that Fed would need to adjust bond purchases this year
- US December factory orders +1.1% vs +0.7% expected
- Gold below to $1800 for the first time since December
- US weekly initial jobless claims 779K vs. 830K estimate
- US Q4 prelim non-farm productivity -4.8% vs -3.0% expected
- BOE's Bailey: If outlook for inflation weakens, MPC will take whatever action necessary
- The AUD is the strongest and the EUR is the weakest as NA traders enter for the day
- BOE's Woods: Bank responses show less of an operational challenge at zero rate than compared to negative rates
- US January Challenger layoffs 80k vs 77k prior
- BOE leaves bank rate unchanged at 0.10%
The NY session began with the GBP pushing rapidly back above unchanged levels after the Bank of England pushback against negative interest rates, and technical selling prior to the statement, led to a short covering run back to the upside. All the GBP pairs moved in the favor of the pound with the GBPJPY, GBPNZD, EURGBP and GBPCHF all rising by 0.70% or more.
The GBPUSD (as a pair)was more contained (the GBPUSD moved up 0.19%) as USD buying was also a theme today. The greenback was supported by a continuation of stock buying on better earnings (actually pretty impressive earnings), a general rising trend in US yields (the 30 year got within 5 bps of 2.0%), and hopes for better Covid days ahead as vaccinations and more of a herd immunity creates visions of a finish line for the pandemic. Of course the finish line could also end up being a mirage if new Covid variants start the whole process over again. Let's stay positive.
Time will tell, but as mentioned, the 30 year bond moved toward the 2% level today (high yield moved to 1.95%) and stocks saw record closes for the Nasdaq, S&P and Russell 2000. Each of the major indices closed right at the highs for the day. European equity's were also mostly higher the day (the exception was a UK FTSE 100).
While the GBP and USD moved higher, the NZD and EUR were the weakest of the major currencies.
The EURUSD was weaker for the 4th day in a row, but did find support buyers right at the key 100 day MA at 1.19566. The level is increasingly important as it also corresponds with swing highs going back to August 2020 (and not broken until December 1, 2020). A move below the level in the new trading day would be more bearish.
The USDJPY bounced back from the 18 pip trading range yesterday with a 59 pip move higher today. It is closing near session highs and tests its 200 day MA at 105.57 at the close.
As mentioned earlier, the GBPUSD moved down initially today and in the process fell below key support at 1.3610. However, after the BOE decision and statement, The pair soared to and through that level and the 100/200 hour MAs at 1.36649 and 1.3682 respectively (the high reached 1.36974), but profit taking pushed the price back toward the MA levels. The pair is closing between the MAs at 1.3665.
Gold prices today tumble lower by about $40 and closed below the $1800 for the first time since early December. The $1763.51 is the 50% of the move up from the March 2020 low to the August 2020 high. In early December, the price low stalled at that level. If the dollar continues to move higher in the new say, a run back toward that level may be in the cards.
