Forex news for NA trading on February 8, 2021.
- Record closes across the board with small caps/NASDAQ leading the way, but some market big cap favorites not joining in.
- Fed's Bostic speaking on the economy
- WTI crude oil futures settle at $57.97
- Reuters: US Covid trends moving in the right direction
- NZ finance minister Robertson releases 2021 budget policy statement
- Fed's Barkin in FT: Shrugs off inflation risks from stimulus plan
- EU Dombrovski: EU economy to rally in Q2 as more vaccinations help lift lockdowns
- More from ECBs Lagarde: January rebound in inflation was expected
- Feds Mester: US economy is in a slow recovery, but vaccinations could lead to strong increase in activity
- European shares end the session with gains
- ECB Lagarde: Surge in Covid 19 cases a significant downside risk to euro area
- New York Fed survey: US household spending growth expectations highest in 5 years
- WTI crude oil futures continues its move higher
- Bitcoin breaks $44,000 and stalls just ahead of the $45,000 level
- The USD is the strongest and the GBP is the weakest to start the NA session
- Bitcoin soars to fresh all-time high on Tesla investment
The dollar is ending lower and the weakest of the majors. Gold has moved up in reaction to the lower dollar. Stocks closed at record levels across the board being supported by the weaker dollar, and interest rates were steady. PS bitcoin surged by over $6000 thanks to news that Elon Musk/Tesla had .1 $0.5 billion into Bitcoin (he also toyed with influential tweets over the weekend focused on Dogecoin.
The fundamental catalyst seem to have been Fed speakers who continue to say policy is not changing anytime soon despite expectations that growth may increase and inflation may also increase temporarily. However employment is likely to lag which will allow the Fed to keep their collective foot on the accelerator. That spells Goldilocks.
Looking at the strongest to weakest of the major currencies, the AUD and NZD are ending as the strongest of the major on risk on flows. As mentioned the USD was the weakest. Note, however, the USD, GBP, EUR and CHF were bunched together at the bottom of the ranking today. Nevertheless, the weaker dollar, put in motion the other reactionary trends.
For the stocks, they latched onto the weaker dollar as a stimulus to overseas export growth (at least in theory). Other catalysts are the Fed's Goldilocks scenario. Either way, major indices ALL rose to record highs with the riskier smaller caps leading the way once again. They rose by 2.53%. The NASDAQ index added 0.95%.
What was interesting with the equities, however, was that the gains were made without help from the traditional large-cap high flyers normally associated with the market moving higher. Amazon (-0.87%), Netflix (-0.52%), Alphabet (-0.21%), Salesforce (-0.04%),Microsoft (+0.11%) and Apple (+0.11%) contributed little or negative to the gains today as money flowed to the mid and small caps instead. Can the market rally without the larger caps participation? Is it a signal of greed into the riskier companies that will end in tears? Or is it time for the more beaten or tame sectors to take the ball and run? Time will tell. European shares were also mostly higher with Germany and Spain eking out small gains. Italy led the way with a 1.48% gain
In the US debt market today the yield curve changes were mixed with 30 year yields backing off after trading above 2% for the 1st time in over year. The issue is closing near 1.955%. The shorter end saw the 2 year yield move marginally higher and off its all time low yield of 0.1012 reached on Friday. The 2- year is trading at a yield of 0.111% near the close.
