Forex news for North American trading on November 23, 2020
- US equities get a late lift to finish higher
- Citi: We remain bullish JPY & GBP; long AUD/USD & AUD/NZD
- Fed's Evans repeats that central bank won't have a good reading on economy until spring
- Yellen is Biden's pick as Treasury Secretary - report
- Crude oil futures settle at $43.06
- BOC's Gravell: Risk of wave of consumer defaults seems low
- Brussels considers asking for 10-15 year Brexit review clause - report
- Yellen appears to be the favorite to be named Biden's Treasury Secretary
- US daily covid cases 147,840 vs 184,591 yesterday
- US sells 5-year notes 0.397% vs 0.390% WI
- Fed's Barkin: More likely to revisit fiscal prudence in coming months
- President-elect Biden is announcing some posts within his administration
- New York Covid stats: 5906 new cases vs 5391 previously
- BOE Bailey: Balance sheet will be bigger, but...
- US sells 2-year notes at 0.165% vs 0.167% WI
- BOE's Haldane: Data since Nov consistent with slowdown
- Markit Nov US services PMI 57.7 vs 55.0 expected
- Monday is quickly becoming vaccine day but it's not all good news today
- White House weighs more action against China
- The GBP is the strongest and the USD is weakest as the NA session begins
- Chicago Fed national activity index +0.83 vs +0.27 expected
- Canada Oct wholesale trade +0.9% in early estimate
The USD opened the North American session as the weakest of the major currencies. Then things started to turn around for the greenback. Central in the turnaround was a stronger than expected Markit PMI data for the month of November. The service, manufacturing and composite readings all beat expectations easily, and dollar buying was the flavor of choice - and higher the dollar did go.
At the start of the NY session, while the USD was the weakest, the GBP was the strongest of the majors. However, at around the London fixing, the greenback had reversed all the GBPUSDs gains and then some. It traded as high as 1.3397, but then tumbled through the Friday close at 1.3276 on it's way to the session low at 1.3263.
The other major currencies vs the USD were racing higher as well. All the major indices had low to high trading ranges above the norms seen over the last 22 trading days as well.
It was a fast break the other way for the forex market.
Meanwhile, in the stock market, the flow of funds also had it's own reversal. For it, the money moved out of the tech heavy Nasdaq stocks into the Dow 30 (led by Boeing). The Nasdaq index moved from a gain of 0.80% at the high, to an intraday low at -0.49%. The Dow meanwhile remained positive (up 0.24% at the lows but off it's highs). The S&P was between the two indices for the day.
The rise in the dollar seemed to be inspired by flows, perhaps some lower liquidity and short covering. That move ultimately ran out of fuel, and in the NY afternoon session there was a corrective move back to the downside.
Stocks also staged a rally - helped by an article stating that former Fed Governor Yellen would be the next Treasury Secretary in the Biden administration. The market seemed to latch onto the idea that Yellen, a dove as Fed chair, would be more supportive of more a simulative fiscal policy as well (or at least fight for it on Capitol Hill) -which helped to boost stocks.
Overall, it was a wild down and up and back down day for the USD. With the Thanksgiving day holiday ahead on Thursday and liquidity conditions perhaps thinning out a bit as traders start to eye the end of year, perhaps more of the same will be in story going forward.
In other markets today:
- Gold is ending the day with steep losses. The precious metal moved sharply lower on the back of the quick move to the upside in the USD. The price is trading down -$34.17 or -1.82% at $1836.90. The high reached $1877.16. The low extended to $1831.08.
- Spot silver is ending down -$0.58 or -2.41% at $23.59
- WTI crude oil for January delivery rose by $0.41 or 0.99% at $42.83.
In the US debt market, yields moved higher with the yield curve steepening a bit. The 10 year was up 2.9 bps while the 30 year bond yield rose 3.5 basis points.
