Forex news for NY trading on May 26, 2020
- US equities hit session low ahead of the close
- Trump and Pompeo meeting to discuss sanctions on Chinese officials
- WTI crude oil futures settle at $34.35
- Trump does not see how Hong Kong remains financial hub
- US CDC reports 592 new virus deaths vs 620 a day ago
- US sells 2-year notes at 0.178% vs 0.176% WI
- Fed's Bullard: US economy past initial shock from coronavirus pandemic
- ECB's De Guindos: ECB committed to addressing bond-market fragmentation
- Merck CEO casts doubt on timeline for coronavirus vaccine
- Dallas Fed May manufacturing index -49.2 vs -62.0 expected
- US May consumer confidence 86.6 vs 87.0 expected
- New home sales for April 623K vs. 480K estimate
- US March Case-Shiller 20-city house price index 3.92% y/y vs +3.4% expected
- March FHFA house price index +0.1% vs +0.5% expected
- ECB's Lane: Even a lot of recovery in recent months would leave econ in expected range
- Philly Fed May non-manufacturing index -41.4 vs -82.5 prior
- April Chicago Fed national activity index -16.74 vs -4.19 prior
- The NZD is the strongest and the USD is the weakest as NA trader enter for the day
The USD is ending the session as the weakest of the major currencies as flows moved to "risk on". The NZD, AUD and CAD all moved higher on those flows with the NZD moving +1.61%, the AUD moving +1.59% and CAD by +1.36%. The JPY had the smallest % gain vs the USD at +0.20%.
The hope is the reopening of the global economies leads to increases in those industries hit hardest during the crisis and an overall return to normal economic levels. Having said that Fed's Bullard said today that he sees the unemployment rate "below double digits" by the end of the year. Then again, Bullard back on March 22 said that the US jobless rate may soar to 30%. So he can be off in his assessments.
Given the redistribution of funds into the general industrial industries, the tech heavy Nasdaq was up only modestly, while the largest flows went into the 30 Dow stocks Leading the Dow stocks were the financials. Goldman Sachs rose by 9%, Bank of America rose by 7.2% J.P. Morgan rose by 7.1%. Industrial companies like Boeing, up 5.24% and Caterpillar up 4.36% were also strong gainers today.
Some tech stocks which did not fare well today included AMD -3.57%, Nvidia -3.3%, Facebook -1.2%, Microsoft -1.07%
Overall, the NASDAQ and S&P index ended near session lows (a late day report port about sanctions against China also helped contribute to the weaker end to the trading day).
The NASDAQ index eked out a small 0.17% gain, while the S&P rose by 1.22% but well off its intraday high of 2.24%. The Dow industrial average was still off its intraday high of +2.91% but ended near the middle of the trading session range at +2.17%.
In other markets today, gold fell by over $20 or -1.17% to $1711.63. Safety flows into gold were unwound.
WTI crude oil futures continued its run to the upside, however, with a gain of $1.02 or 3.04% to $34.26. As global economies reopen and workers at back to offices, the demand for energy products should start to sap why some of the excess supply. In addition OPEC+ countries will be doing their part in limiting production. In the US the number of rigs continued its downward spiral last week and as a result will limit the supply of domestic oil.
Some technical levels of importance for the major currencies going into the new trading day:
- EURUSD: The EURUSD moved higher and above its 100 day moving average at 1.09574 in trading today, but stalled ahead of swing highs from last week at 1.09985 and 1.10077. The high price today reached 1.09952. The high price from last week is also near its 200 day moving average which comes in at 1.1009. Getting above the 200 day moving average going forward is the next big hurdle from a technical perspective. Failure to do that could see buyers turning to sellers and a retest of the broken 100 day moving average at 1.09574 in the new trading day.
- USDCAD: The USDCAD added oversize range of 228 pips (with most to the downside). The 22 day average is only 121 pips. The fall stalled the price move below a April and May floor int he 1.3849 to 1.3865 area and the 50% retracement of the move up from the January 2020 low at 1.3131. Those levels will now be risk defining levels for shorts into the new trading day. Stay below is more bearish
- GBPUSD: The GBPUSD was another big pip mover with a 181 pip trading range (vs 22 day average of 113 pips). The move to the upside did stalled near its 50% retracement of the move down from the April 29 high. That level comes in at 1.23577. The high price for the day reached 1.23622 before rotating lower into the close (closed at 1.2334 area). In the new trading day traders will I support below at 1.2300. If the bullish momentum continues, getting and staying above the 50% retracement at 1.23577 is the obvious next key target.
- AUDUSD: The AUDUSD moved above its 200 day moving average for the 1st time since January 17, but also had strong overhead resistance from an old floor area going back to August 2019 between 0.6662 and 0.66847. The high price for the day reached 0.66744 before rotating back lower. The price is closing the day right near its 200 day moving average level. In the new day, traders will need to see the price not only move above its 200 day moving average but also the swing high area at 0.66847 to keep the bullish bias moving in the upward direction. There is also a good chance that sellers lean against the area and correct the pair back down toward its 100 day moving average ultimately at 0.64858.
- NZDUSD: The NZDUSD moved above its 100 day moving average at 0.62052, but could not sustain momentum and is closing the day just below that moving average level. In the new trading day the 100 day moving average will be the barometer for the bulls and bears. Move above and the bias is more bullish. Stay below and the bias is more bearish.
