Forex news for NA trading on March 18, 2021.
- Stocks close near session lows. Nasdaq plunges over 3%
- Bitcoin runs back lower after briefly trading above $60K
- Nasdaq retests -and now breaks below - its 100 hour MA
- The US economic calendar is light on Friday
- Italy to restart AstraZeneca vaccination on Friday
- U.S. Treasury auctions off $13 billion and 10 year inflation index notes at -0.58%
- Major European indices close the day with gains as flows move EU equities
- Pres Biden targets mid-May to begin relaxing travel restrictions
- EU drug agency concludes that AstraZeneca benefits outweigh the risks
- Fed focus moves to SLR exemption
- The big turn in monetary policy is underway
- US initial jobless claims 770K vs 700K estimate
- US March Philly Fed business outlook 51.8 vs 23.3 expected
- The AUD is the strongest and the CHF is the weakest as NA traders enter for the day
Although bond yields moved higher on the day after the FOMC policy makers reiterated their expectations for steady rates despite 2021 growth prospects toward 6%,inflation likely above 2% (2.2% to 2.4%), AND the Nasdaq index plunging over 3% on the day today, the biggest eye opening move today was in the price of crude oil which is down over 8% on the day and back below the $60 level.
The high price for oil reached up at $67.98 on March 8th (two weeks ago). The price has since plunged some -14.3% from the high and trades at the lowest level since February 12. The 50% midpoint of the years trading range which bottomed at the start of the year at $47.43, comes in at $57.71.
The move lower seemed not to have much in the way of a catalyst except perhaps the idea that growth is already perceived to be starting to slow as a result of the move back higher in yields and the expected slowing of sectors like housing due to higher rates, and too high prices. Housing has been a tail wind to the economy during the pandemic and perhaps if that bubble starts to burst (or deflate), the Fed won't even get the 6% growth they expect but still get higher inflation (oh no).
These feast or famine moves tend to correct themselves fairly quickly in recent times, but for at least today, stocks lower, yields higher and crude oil lower is not the prettiest of pictures.
Economically speaking, the initial jobless claims came in weaker than expected at 770K vs 700 est. This week corresponded with the survey week by the BLS for the next jobs report to be released the first Friday of the new month. Nevertheless, if you go back a month, it was than the data at that time. The Philly Fed index of business conditions, came in much higher than expectations and talked of higher input and labor costs were leading to higher consumer prices. With low year ago inflation numbers rolling off the next few months as a result of the start of the pandemic lockdown in March last year, should price also jump higher, the CPI can get ugly pretty fast.
In the forex today, the USD is ending the day as the strongest of the majors. The NZD is the weakest. The CAD was also weaker due to the plunge in oil prices. The dollar rose by 1.06% vs the NZD and added 0.83% vs the CAD today.
Below are the closing levels and low and high points for the North American and Europe stock markets. North American shares were lower, while European shares were higher.
Looking at the US debt market, the 10 year is leading the way to the upside with a gain of 7.4 basis points. The 2-10 year spread is also higher with a gain of 5-6 basis points to 156.19 vs 150.97 at the close on Wednesday.
