Session Wraps - Major Forex Headlines wrapped up by trading session

Forex news for New York trade on

Markets:

  • Gold down $15 to $1854
  • US 10-year yields down 2 bps to 1.85%
  • S&P 500 down 12 points to 3841
  • WTI crude down $1 to $52.14
  • Euro leads, CAD lags
The extremely strong manufacturing and services PMIs from Markit were a reminder that the US economy continues to recover even amongst the resurgence in the pandemic. The contrast with UK data is a remarkable demonstration of how Americans seemingly shrug off death and illness while other consumers go into hiding.

The report helped to shore up sentiment in what had the chance to a a strongly negative day. Equities pared losses afterwards and the US dollar gave back some of its gains.

In general the FX market was more subdued than equities. The euro chopped sideways around 1.2165 and USD/JPY did the same around 103.80.

Sterling showed some impressive life in a bounce back to 1.3680 from 1.3635 despite the poor UK economic data.

On the flipside, Canadian retail sales were strong but the loonie couldn't hold a bid and made now lows later in the day. Some of that was on a decline in commodity prices but oil was only down 2% and recovered from the lows.

The week ahead features the FOMC and waves of earnings. There's a real sense of greed in the market as retail traders pile in. Powell will surely offer a reminder that money will stay cheap for the foreseeable future.

Have a great weekend
Forex news for New York trade on

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De-risking into the weekend


Other markets
  • FTSE -0.71%
  • Euro Stoxx -1.06%
  • Dax -0.80%
  • CAC -1.18%
  • Bitcoin +3.16%
  • Gold -0.96%
  • US oil -2.33%
De-risking into the weekend

The session started with risk off tones on some de-risking into the weekend after the strong gains seen this week in equity markets since Tuesday. That risk off tone accelerated as the PMI data from Europe presented a string of weak prints. First off, let's look at the UK retail sales print which hit the GBP early in the session. 

December's retail sales from the UK was a terrible report. The ONS reported it as the largest annual fall for sales in history. See the release here.  However, online sales went up nearly 50% from 2019. Unsurprising, but at least there was some sort of growth metric in the dark cloud of that report. The question I have going forward is to what extent has retail selling been permanently changed by COVID-19. Some of the digital trends during COVID-19 are bound to stay in a post COVID-19 world, but which ones? All eyes on Israel for that one. 

The GBPUSD hated the report and GBPUSD fell away fast from the 1.3700 level and new recent highs on the daily chart.

Risk off Jan 22

The report has potentially opened up a decent sell with the USD strength on the risk off tones and signalled a short term trend reversal. See here. As an aside there is a decent trading rule used by the legendary Wall St trader Victor Sperandeo which applies in the GBPUSD situation. You can check it out here. 

European PMIs come in weaker than expected

EURUSD was initially pressured on France's PMI reading. Manufacturing picked up, but services continued its dip. German PMI's were so so, but UK PMI's were a disaster. This dragged the whole European equity complex lower and US futures fell on the disappointment too. The DXY held up support at 90.00 as anticipated as the risk off tone remained. After the PMI misses the risk off tone had a reason to stay. 

In other news Italian and German bond yield spreads hit a 9 week high on the prospect that Italian PM Conte may be seeking early elections after recent polling data. Commodities fell lower on the stronger USD with platinum down -3.00% at one stage, copper nearly -2.00% and WTI testing the daily trend line and gold falling over 1.00%

In the big picture nothing too alarming and this is just a pullback in recent risk asset strength. The strength is set to continue as central banks turn more optimistic and fiscal stimulus taps are wide open. Any deeper retracements are likely to find medium term dip buyers even with some de-risking into the weekend. A January set back in PMI's was expected after the recent lockdowns across Europe. They are just worse than expected plus we are de-risking into the weekend so that is the way to understand these moves for now. 

As an interesting aside AUDNZD shorts now look attractive as the market digests the latest shift from New Zealand and the moves higher in NZ bond yields. This was on the back of the better than expected CPI data. It was the final piece in my jigsaw for AUDNZD shorts and all is according to plan so far.  The chart shows an attractive area for shorting and risk can be easily managed. See here. BTCUSD found some support at $30,000 which is holding for now. 


That's all from me folks enjoy your weekend.



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Forex news for Asia trading for Friday 22 January 2021

BTC/USD dropped under $30,000 and back to its early-January level during the session here, adding to losses sustained in the past two days or so. It dipped very briefly to just under $29K but has since managed to climb above $30k again.

It was not only BTC falling during the session here, nerves seemed to dominate with lower prices for AUD, NZD, CAD, gold and silver (GBP too) ahead of the weekend. Further compounding nerves a little is new US President Biden to speak in the afternoon Washington time with Europe and UK trade having finished for the day leaving only North American markets open.

EUR/USD was resilient, holding its gains from US afternoon / Asia morning trade. The test will come in Europe time.


Data today - New Zealand inflation rose ahead of expectations prompting analysts to dial back expectations for negative rates from the Reserve Bank of New Zealand. 

Forex news for Asia tradingfor Friday22January 2021

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Forex news for North American trading on January 21, 2021

A snapshot of other markets into the close shows:

  • Spot Gold, $-2.55 or -0.14% at 1869.30.
  • Spot silver plus $0.11 or 0.44% at $25.95
  • WTI crude oil futures for March delivery $-0.25 or -0.47% at $53.06
  • Bitcoin fell $3235 or -9.26% to $31688
The ECB kept rates unchanged with ECB's Legarde saying:
  • Uncertainty remains high
  • Inflation remains very low
  • Downside risks to short term outlook, but less pronounced
  • Renewed infections and lockdowns are disrupting activity
  • interest rates to remain at 0 until at least inflation 'robustly converges' to our target of close to, but below 2%
She more specifically quantified the pandemic period by saying:
  • "Pandemic period" is until "at least March 2022"
  • We will be present in the market until at least March 2022, at least
And added that the:
  • FX appreciation is a drag on inflation
The EURUSD moved lower on the the FX appreciation comment, but could not sustain downward pressure after running into support its 200 hour MA at 1.2134 area. The price bounced higher into the close and trades near the session highs. 

In the US fundamentally, the initial jobless claims did see a dip to 900K in claims for the week from a revised 926K (was 985K), but it is still 900K.  Jobs remain a problem in the US especially in the service industry.  

Housing starts and building permits on the other hand are booming with YoY starts up 27%.  The Philly Fed index also spiked back higher to 26.5 vs 11.8 est. and 9.1 last month.  Within the report, new orders and employment both rose sharply which contradicts and away the initial claims data at least in the Philadelphia area. 

In the US Stock market today, the NASDAQ index continue to lead with a 0.55% gain. The S&P index eked out a small gain which was a new all time high close. The Dow industrial average closed marginally lower, ending its up streak and failing to make a new all time close.  

In the forex, the GBP was the strongest of the majors followed by the EUR. The USD and JPY were the weakest.  

The GBPUSD rose by 0.56% (USD down -0.56%). In the NY session, the price traded up and down after rising in the Asian session and early London session. The pair nevertheless it is closing nearer its highs for the day at 1.3745. The low in the New York session stalled just ahead of key swing support near 1.3700. In the new trading day stay above that level will keep the buyers in control.

Forex news for North American trading on January 21, 2021_

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