Forex news for North American trading on February 24, 2021
- US stocks close sharply higher. Dow industrial average closes at a record high
- Here we go again? GME stock halted. Up 103%
- NZ Finance Minister: RBNZ now required to consider impact on housing
- RBNZ Governor Orr: Need to make sure actual inflation is sustainable
- US crude oil futures settle at $63.22
- The Federal Reserve system is down
- OPEC+ weighs boosting oil output by 500,000 barrels per day from April
- More from Fed's Clarida: Do not expect sustained upward inflation pressures
- US treasury auctions off $61 billion of 5 year notes at a high yield of 0.621%
- Fed Clarida: prospects have brightened, outlook downside diminished
- More from Chair Powell: There is reason for optimism for 2H if we control virus
- Chairman Powell: One time price rises don't necessarily spur inflation
- European indices close the session higher, erasing earlier declines
- More from Fed's Powell: Some asset prices are elevated by some measures
- BOEs Broadbent: Our debate is about whether negative bank rates would be effective
- Feds Brainard: Shortfalls from maximum employment are key policy guide
- Crude oil inventories showed a build of 1.285M vs - 6.5M estimate
- Fed's Powell: Bond buying will continue the current pace
- US new home sales for January 923K vs. 856K estimate
- Bank of England: Broadbent risk for UK unemployment are in both directions
- US bond yields continue to stretch the range
- The NZD is the strongest and the JPY is the weakest as NA traders enter for the day
For the 2nd day in a row, the Fed Chair gave testimony on Capitol Hill for 2-3 hours, and also for the 2nd day in a row, he said that inflation was likely to remain low (with some transitory increases) and that the Fed's focus on moving more toward full employment. The pandemic is a risk but if the trends continue, the US should see strong growth in the 2nd half and lower unemployment as well as pandemic businesses start to reopen and returned to normal activity.
The US stocks - for the 2nd consecutive day - opened lower on fears of inflation. Bond yields were higher and moved even higher in early NY trading (the 10 and 30 year reached new cycle highs at 1.4337% and 2.291% respectively). That sent the Nasdaq down as much as -1.33%, and the S&P down -0.51%. However just like yesterday, the low for the day was reached in the 1st hour of trading and recovered as chair Powell's testimony continued. The indices are closing at or near session highs for the day with the Dow industrial average closing at an all-time record high.
For the S&P index, it moved back above its 100 hour moving average at 3901.04 and 50 hour moving average at 3906.84. Yesterday the index traded above and below its 200 hour moving average but closed above that moving average level (closing at 3925.43). Staying above those levels keeps bias to the upside for that index.
For the NASDAQ index, however, it remains below its 200 hour moving average at 13609.635. The high price for the day reached 13607.36. Both the 50 hour and 100 hour moving average or even higher at 13764 and 13836 respectively.
The Dow industrial average is the strongest of the major indices on a relative basis most recently. It traded to new all time highs at 32009.64, and closed just below that level at 31962.13.
So the stock complex are higher but the technical are mixed as investors send the flow of funds into the recovery, industrial stocks and exit the tech, high flying ones - at least for now.
PS. Also helping the market today was that the US Food and Drug Administration said the Johnson & Johnson Covid-19 vaccine has met the requirements for emergency use authorization -- another step toward the authorization of a third shot for the United States.
In the debt market, as Powell testimony progressed today, yields also started to drift more to the downside. Although the 10 and 30 year are looking to end the day higher by 4 to 6 basis points, they were much higher. Below is a snapshot of the changes in ranges for the treasury yield curve points.
In the forex market, the commodity currencies were the strongest led by the NZD. The CAD and AUD were also solidly higher with declines only against the NZD.
The NZD got a boost into the close after the NZ finance minister said that the RBNZ was now required to consider housing in policy decisions.
The JPY was the weakest as it saw JPY pairs move to the upside on the traditional "risk on" flows (into the commodity currencies and out of the relative safety of the JPY, CHF and USD. The USD did initially move higher into the stock market open and Powell testimony, but reversed lower into the close. Nevertheless, it still maintained gains vs the JPY and CHF, but fell by 1.04% vs the NZD and 0.75% vs the AUD and CAD.
In other markets:
- Spot gold it is closing down $-2.10 or -0.12% at $1803.54. The hi for the day reached $1813.99. The low extended to $1783.67
- Spot silver it is closing up $0.26 or 0.95% $27.93
- WTI crude oil futures rallied strongly despite a build in inventories (was expecting a drawdown although the private data also showed a surprise build), and comments from OPEC+ source that they were considering increased production. The price is trading up $1.74 or 2.82% $63.41
- Bitcoin on coin base had an up and down session and is trading up $470 were 1.0% of $48,454. That is still off the intraday high $51,415.41, and closer to the low for the day at $47,002.
