Forex news for North American trading on May 24, 2021
- Major indices close higher
- Bitcoin moves closer to $40,000
- US commerce Sec. Raimondo: $52B investment in chip manufacturing
- UK ministers wont back Biden push for corporate tax minimum
- WTI crude oil futures settle at $66.05
- US issues do not travel advisory for Japan over Covid
- Fed's Bullard: Expects above 2% inflation this year and next
- Fed's Bostic (voting member): US economy has been more resilient
- More: BOE's Bailey testifies to the UK lawmakers on inflation concerns
- New York Fed survey: The Feds System Open Market Account (SOMA) could grow to $9 trillion
- BOE Saunders: Does not see evidence that the economy is recovering strongly enough
- BOC Macklem: He is comfortable with pulling back on extraordinary stimulus
- Modest changes for the European indices
- BOE Bailey: We have quite an unbalanced recovery
- Kyoda: Japan mulls extending Covid emergency for Tokyo, 8 areas
- Brainard Q&A: US in the middle of an unprecedented rebound in the US economy
- Bitcoin continues is a rebound after the Sunday plunge
- Chicago Fed national activity index for April 0.24 versus 1.10 estimate
- The EUR is the strongest and the GBP is the weakest as the NA session begins
It was a quiet day from an economic standpoint. The only release was the Chicago Fed National Activity index which is a compilation of 85 economic indictors. It came out worse than expected and lower than last month although the index was still positive.
There was the usual Fedspeak which if not necessarily on topic (Brainard made a speech on central bank digital currency) was not surprising given the recent theme from Fed officials that policy was still on hold with expectations for higher transitory inflation. Fed's Bostic, Bullard, and Brainard all spoke.
BOE officials - led by Governor Bailey and including members Cunlliffe, Haldane, Saunders - testified to UK lawmakers. Like Fed officials, the comments and prepared text did not move the needle much in the UK. At the start of the proceedings the GBPUSD was trading around 1.4158. It is currently trading around the same level to end the trading day. The 100 hour MA for the pair is also near that level now after drifting modestly lower through the day.
The strongest currency today was the NZD, while the weakest were the USD and the GBP. The EUR was the strongest at the start of the trading day, helped by a run higher in the EURGBP, but backed off in the North American session.
The USD was more mixed at the start of the day, but with yields staying modestly soft and the US stocks running higher, the flow of funds were out of the safety of the USD and more into the risk currencies. The 10 year yield move down2 basis points today while the 30 year fell -1.7 basis points.
In the US stock market, the move to the upside was led by the Nasdaq index (up 1.41%). The S&P index rose by nearly 1%. The Dow was up for the 3rd straight day. Gains were made across the board on the markets acceptance - at least for the day - that the corporate earnings gravy train would continue with the support of the Federal Reserve.
Will work nine In Europe, German and Switzerland were off on holiday today, but UK, France, closed higher. Spain's Ibex was flat and the Italy's FTSE MIB was negative.
Bitcoin moved up to test the $40000 level again after trading as low as $31500 over the weekend. Dip buyers were later helped by a favorable tweet by Elon Musk late in the day.
Some technical levels going into the new trading day:
- EURUSD:The EURUSD rallied in the London morning session and in the process moved above its 100 hour moving average at 1.2205. For the entire NY session, the price stayed above that MA and is trading around 1.2215 at the end of the NY day. In the new day, the technical bias is more bullish above the moving average at 1.2205. Stay above and traders will target the swing highs last week starting at 1.2232 and moving up to 1.22424 The February high at 1.22448 is also a hurdle on the topside. Break above would have traders targeting the January 2021 high at 1.23488.
- USDJPY: THe USDJPYs buyers had shots on moved above the 100 hour MA over the last two trading days, but each of the 10 tries could not muster much in the way of upside momentum As a result, the price moved lower in the NY session. The 100 hour MA is at 108.90. It will take a move above that level to hurt the bearish bias going forward technically. On the downside, the 108.60 and 108.56 were swing lows and Friday and Wednesday of last week. The swing lows from May reached 108.453 and 108.34. They are need to be broken to open the downside up
- GBPUSD: The GBPUSD spent most of the trading day between its 200 hour moving average below at 1.41265 and its 100 hour MA above at 1.41578. There were tries to extend above each of those moving averages intraday, but momentum stalled fairly quickly. The price is trading around 1.4154 into the new day - closer to the higher 100 hour MA, but remaining below the level. Sellers are leaning for now at least. However, if there is a break above, the bias shifts more to the upside and I would expect more upside momentum.
- AUDUSD: The AUDUSD iis end of the day right near its converged 100 and 200 hour moving averages at 0.77515. The price is at 0.7752. Traders will be looking for momentum in either direction. A move higher targets the high from Friday and Thursday at 0.7782. A move lower will look toward the hundred day moving average at 0.7728.
