Forexlive Americas FX news wrap: Strong start to the new quarter for stocks. Dollar falls with US yields.
Forex news for NA trading on April 1, 2021
- March non-farm payrolls preview: Good Friday release, by the numbers
- Crude oil settle sharply higher at $61.45
- Staying tactically bullish USD/JPY for 111.68 ahead of 112.40 - Credit Suisse
- Impressive day for oil despite added OPEC+ production
- US Covid cases 64,149 vs 62,726 previously
- France reports 50,659 new cases.
- Baker Hughes oil rigs rise to 337 from 324 last week
- Saudi energy min. Voluntary oil cuts will be eased by 250K, 350K and 400K from May
- European shares end the session higher
- Saudi Arabia will unwind its voluntary cut from May-July
- Fed's Daly: We aren't projecting hitting either Fed goal in 2021
- OPEC reaches deal on gradual output increase - report
- OPEC debates gradual increases in May, June and July
- US construction spending for February -0.8% versus -1.0% estimate
- March ISM manufacturing 64.7 vs 61.5 expected
- Markit US manufacturing PMI final 59.1 vs 59.0 prelim
- Canada March Markit PMI 58.5 vs 54.8 prior
- Oil climbs as OPEC+ members make statements ahead of closed meeting
- Canada February building permits +2.1% vs -1.4% expected
- US initial jobless claims 719K vs 675K estimate
- The EUR is the strongest and the AUD is the weakest as NA traders enter for the day
A summary of some of the other markets into the close shows:
- Spot gold plus $21.40 or 1.25% at $1729.20
- Spot silver plus $0.51 or 2.13% at $24.93
- WTI crude oil futures took the production increases down the road in stride with a gain of $2.12 or 3.58% at $61.28. The high price reached $61.75
- Bitcoin it is virtually unchanged at $-20 or -0.03% at $58,934
The US stock market got off to a good start for the second quarter with a record close for the S&P and a first look and close above 4000 for that index. The Dow and the Nasdaq remain off their highs but both indices also closed comfortably higher on the day.
- S&P index rose 46.92 points or 1.18% at 4019.84. The new all-time high is at 4020.63
- Nasdaq index rose 233.23 points or 1.76% at 13480.10. It's high reached 13487.07 just above the closing level.
- Dow rose 171.86 points or 0.52% at 33153.41. It's high reached 33167.17 today.
- Russell 2000 rose 33.38 points or 1.5% at 2253.90
The rise seemed to have gotten a lift from more infrastructure stimulus coupled with lower rates today. The 10 year yield moved down -6.7 basis points, while 30 year yields fell -7.7 basis points on the day. The 2-10 year spread fell nearly 7 basis points as well to 151.30 basis points from 158.01 at the close yesterday.
Lower rates, more stimulus is good news. The other side of the coin which may be a headwind, is that Pres. Biden is looking to pay for stimulus with an increase of corporate tax rates to 28%. There is a lot of balls in the air and changes that may or may not happen (getting Republican support for a $2T fiscal plan with a 7% increase in corporate taxes may be a hard sell).
IN the forex, lower rates, higher gold helped to drive the USD lower. Of course technicals were also in play. The USD started the day higher...marginally... at the start of the day, but ended as the weakest of the majors as it steadily declined during the day. Near the end, the dollar was at or near extremes vs all the major currencies with the biggest mover being vs the NZD (-0.56%). The greenback also fell by -0.38% vs the EUR and -0.37% vs the GBP.
Below are the rankings of the strongest vs the weakest. The NZD was the strongest of the majors today.
Fundamentally today, the data did not necessarily drive for a lower dollar (or lower rates for that matter). Although the initial jobless claims moved back above the 700K level, the four week moving average move to the lowest level since the pandemic began. People expect jobs to return with a reopening at a steady pace. The ISM manufacturing index was much stronger than expected at 64.7 versus 61.6 with new orders at 68.0 much higher than last month 64.8. Employment increase to 59.6 from 54.4 last month. Prices paid continues to be a problem at 85.6, but that was steady versus 86.0 last month.
The Good Friday holiday is beginning across the world which means a number of countries will be on holiday. In the US, the stock and bond markets will be closed tomorrow, but the Bureau of Labor Statistics will release the March nonfarm payroll at 8:30 AM ET. The Forex markets will continue to be open as well. I would expect lethargic trading although you never could be too sure with low liquidity levels and a non farm payroll reports. My advise to traders who deal more in the short term, take the day off and enjoy the day and weekend. PS Monday will also be a bank holiday in the UK.