Forex news for NY trading on March 7, 2019
- February 2019 non-farm payrolls preview: By the numbers
- The rally in stocks since January is a huge bet on a single factor (and it's fading)
- US January consumer credit $17.05B vs +$17.00B exp
- Crude oil futures settle at $56.66
- Stock indices toy with a shift in bias
- BOC's Patterson: Need more data to know if weakness will persistent
- ECB's easing package less dovish than Draghi suggested but no food for EUR bulls - Nordea
- Draghi said to have pushed for ECB stimulus package
- EU said to make new offer to UK on Brexit backstop
- China worried about last-minute changes in trade deal with US
- BOC's Patterson: Economic 'detour' may take longer than anticipated
- ECB Sources: ECB opted more radical easing after growth showed bigger slowdown
- Feds Brainard: Rising economy risks argue for softer Fed rate path
- US household net worth fell -$3.73T in 4Q
- European shares move lower in trading today
- Draghi Q&A: There no discussion about restarting QE or cutting deposit rate
- Draghi Q&A: New measures are adding accommodation
- ECB forecasts: 2019 GDP at 1.1% vs 1.7% in January forecast
- Draghi opening statement: ECB decision aimed at lifting inflation
- Canada January building permits -5.5% vs -5.0% expected
- US initial jobless claims 223K vs 225K estimate
- US Q4 non-farm productivity +1.9% vs +1.5% expected
- The NZD is the strongest. The GBP is the weakest at the start of the NA session
- ECB leaves key rates unchanged as expected
In other markets, a snapshot near the end of day is showing:
- Spot gold, -$0.90 or -0.07% at $1285.50
- WTI crude oil, +$0.33 or +0.60% at $56.57
The US stocks ended the day sharply lower with the S&P and Nasdaq indices each closing below their 200 day MAs (see post here).
The S&P index flirted with closing below the 200 hour MA (at 2743 area) but closed just above that level. The Nasdaq index also toyed with the idea of closing below its 200 hour MA around the 7400 level, but it too rallied off the lows into the close. A move below each of the 200 hour MA levels will be more bearish, but if it is to be, it willl have to wait until tomorrow.
Below are the % changes of the major stock indices today. All the major indicea in Europe and the US closed lower. The Nasdaq was the biggest loser at -1.13%.
In the European and US debt markets today, yields were also sharply lower.
The ECB/Draghi admitted defeat on it's quest to raise inflation and growth. Although they kept rates unchanged as expected, they
- slashed both growth and inflation estimates for 2019 and 2020,
- announced a new round of TLTRO stimulation AND
- pushed out hikes to the end of 2019 (from the end of summer) and left the door open for pushing it out further if warranted.
With the estimates for 2019 GDP down to 1.1% from 1.7%, and 2019 inflation cut to 1.2% from 1.6% (remember they target 2%), the market was not so convinced that they would be successfull in getting to a rate hike scenario (are they really going to hike when inflation is 1.2%?)
As a result, 10 year benchmark yields moved sharply lower with the German 10 year moving closer to 0.0% (closed at 0.067%). Italian yields moved down -12.1 bps. UK yields moved down -5.5 bps to 1.172%. The chart below shows the current levels and ranges for the major countries 10 year notes for the day:
US yields were also sharply lower on the day. Below are the changes and ranges for the US yield curve in trading today.
In the forex market, the story was how the EUR got hammered.
Anything with EUR in its name fell sharply and is closing near session lows at the end of the day (see chart below). The EURUSD fell 120 pips. The EURJPY fell -150 pips. Ouch.
Ranking the major currencies vs each other, the EUR was the runaway weakest - outpacing the declines in the GBP by 2:1 (see % changes of the major currencies in the chart below).
The EURJPY was the largest mover - falling by 1.19%. The EURUSD was not far behind that pair, falling by 1.06% on the day.
The JPY and the USD were the strongest of the majors as there was a flight into the relative safety of those two currencies.
A technical look at some of the major currency pairs is showing:
- The EURUSD fell below the 61.8% of the move up from the 2017 low at 1.11858 AND below a trend line on the hourly chart at 1.1184. The final push took the price to a new session low of 1.1177 but could not sustain momentum. The price is closing the day just above that dual support level at 1.1188. In the new day, the level will remain a key barometer for the bulls and bears. The range today in the EURUSD was an oversized 143 pips. Expect a more modest range in the new trading day. If there is a correction higher, look for the 1.1233 level to stall rallies (low from Monday)
- The GBPUSD traded consolidated London morning declines in the NY session, but did fall in the NY session below a support area at 1.3092-99 (risk now for shorts). The low reached to 1.3067. The 50% of the move up from the Feb 14 low comes in at 1.30606. That would be a level to get below if the selling is to continue in the new day. As mentioned, a move above the 1.3092-99 area would likely lead to more buying
- The NZDUSD fell below the 100 day MA at 0.67668 today but stalled just above the 200 day MA at 0.67436 (the low reached 0.6744). That 200 day MA will be a key barometer going into the new day. Buyers have leaned against the level and the price is trading at 0.6753 near the close. They will need to see the price extend back above the 100 day MA at 0.67668 to gain more confidence. A move below the 200 day MA opens the downside for more selling.
- The USDCAD cracked above a topside trendline at 1.3450 currently. Yesterday, the price moved above that trend line and failed. Will the break today fail too? If so, and with more profit taking, the price could move down to a channel trend line at 1.3411 (and moving higher)
Up tomorrow, US employment report. The reaction will be key for stocks and for many currency pairs as well.
Wishing you all a great morning, day, evening.
