Session Wraps - Major Forex Headlines wrapped up by trading session

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Forex news for New York trade on March 5, 2021:

Markets:

  • US 10-year yields down 4 bps to 1.55%
  • Gold up $1 to $1698
  • WTI crude up $2.44 to $66.27
  • S&P 500 up 73 points to 3841
  • CAD leads, EUR lags
Non-farm payrolls delivered yet another whipsaw to short-term traders. It's clear that the playbook going in was to sell risk, sell bonds and buy the US dollar on a strong report. When it came in very strong that's just what happened.

As a result, the US dollar jumped, yields hit new cycle highs and stocks sank. That didn't last though. At the end of the day, a strong economy is still a strong economy and even as yields rose, it wasn't disorderly. That led to some bottom fishing at first that picked up as yields topped.

Just as things began to rebound through, the bottom fell out again as tech stocks crumbled in part due to a 10% drop in the ARKK ETF. That briefly pulled down everything but it also reversed the rise in yields. In turn, dip buyers came again and this time it sustained in a big, slow move higher.

The moves were much bigger in equities than in FX but there were positive ticks in commodity currencies late and some USD selling. CAD was particularly strong late as oil rose above $66.

Have a great weekend.

Forex news for New York trade on March 5, 2021:

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Author: Justin Low

Forex news from the European trading session - 5 March 2021

Headlines:

Markets:

  • CHF leads, NZD lags on the day
  • European equities lower; E-minis flat
  • US 10-year yields flat at 1.563%
  • Gold down 0.1% to $1,696.30
  • WTI up 2.5% to $65.40
  • Bitcoin down 1.2% to $47,341

EOD 05-03
The market is sticking with the momentum from yesterday's key risk events for the most part, as the dollar and oil extended gains in European morning trade.

Equities kept calmer though, as the bond rout pauses for breath ahead of North American trading and US non-farm payrolls to follow today.

That said, sentiment remains fragile and investors still look cautious and nervous as US futures chopped around but are sticking closer to unchanged levels now.

Oil was a strong performer as buyers continue to ride on the OPEC+ decision yesterday as Saudi Arabia took a gamble that US shale will not be offer as serious a threat to its market share as it has done in the past.

That is seeing oil prices climb another 2.5% today, with WTI trading above $65.

Meanwhile, the dollar outperformed as Powell gave the green light for US real yields to surge higher against the backdrop of other central banks trying to take action to curb the surge higher in yields in their respective bond market.

EUR/USD fell to fresh three-month lows from 1.1955 to 1.1914 while GBP/USD dropped to a three-week low just below 1.3800 before keeping above that for now.

Commodity currencies slumped the most with AUD/USD falling from 0.7720 to 0.7653 while NZD/USD fell from 0.7175 to 0.7120 on the session.

USD/JPY also crept higher with the pair gaining from 108.10 to 108.56, pushing to its highest levels since June last year before seeing gains ease to 107.30 levels.

US non-farm payrolls will offer a welcome distraction to the market but the post-Powell narrative is arguably going to remain the key focus ahead of the weekend.

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Forex news for Asia trading for Friday 5 March 2021

It was a lower start for currencies against a Powell-bid USD and that carried on somewhat into Asia time, although in much, much smaller ranges. AUD/USD dipped under 0.7700 (its just above as I update) while NZD is also down. EUR/USD slipped a little further but is holding steady above bids circa 1.1750. USD/JPY budged 108.00 early in the morning and has tracked mainly sideways since, as has USD/CHF. Oil prices have steadied somewhat, which has seen USD/CAD dip from its early highs.

Regional stock markets here also carried through lower from the US lead with Japan, South Korea, Australia and China stocks all falling more than 1%. China has shown a bounce though, indexes SSE Composite and ChiNext index both turned higher while the CSI 300 index recovered a lot of its loss but is still lower on the session so far. Hong Kong's Hang Send has bounced from its lowe also but is more than 0.5% down still. 

Forex news for Asia tradingfor Friday5 March 2021

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Forex news for North American trading on March 4, 2021

The markets were geared up for some Powell relief in the bond market during his interview with the WSJ (the Fed is entering a quiet period so this would be the last chance before the FOMC decision later in the month). That relief did not come.  As a result, rates started to move higher (they were marginally lower at the start of the North American session), stocks started to give up gains and turned negative. The dollar turned from modestly lowered, and soared higher. Gold moved lower.   

The stock selling saw the Nasdaq index move down by -3.41% at the lows. If you thought that was bad, the Russell 2000 fell as much as -4.42%. The Dow was down as much as -711 points at the low.  

The Nasdaq 3 day decline has sent the index down -6.506% over that period (the largest 3 decline going back to September 3, 2020). The declines have now erased the gains for the year (the NASDAQ is now down -1.28% on the year).  The Dow industrial average is now the biggest gainer at 1.04% YTD.

US stocks tumbled

 In the forex market, the USD packed on solid gains vs most of the majors. The USD was strongest vs the CHF  (up 1.03%) as the run higher continues in that pair. The price moved up to test the swing highs going back to September 2020 at 0.92956 (the pair is closing the day just below that key target). 

The USDJPY moved up 0.87% and trading to it's highest cycle high. The pair is trading at the highest level since July 1, 2020 and is looking to get above the 108.00 level also for the first time since July 1, 2020. 

The EURUSD fell back below its 100 day MA and ran (the 100 day MA is at 1.20268 and the EURUSD fell to a low at 1.1961).  The GBPUSD ran up to test its 200 hour MA at 1.4017 just before Powell's interview, and then tumbled to a low of 1.3880 into the close.  

The US dollar is the strongest

In the bond market, the yields along the yield curve saw the 10 year rise by 7.1 basis point. The 2 -10 year spread widen to 140.92 basis points from 134.01 basis points as concerned about inflation continue to push yields higher.

US yields have moved higher

 In the metals markets:

  • Spot gold is trading down -$13 or -0.76% and is below the $1700 level at $1698.37. 
  • Spot silver tumbled $0.72 or -2.77% to $25.37
  • WTI crude oil futures rose by $2.73 or 4.45% to $64.01. The OPEC+ meeting saw Saudi Arabia keep production cuts in play through April, but allowed Russia and Kazakhstan to raise production marginally. 

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