Forexlive Americas FX news wrap: A mixed day for the US dollar after strong 1Q GDP

Author: Greg Michalowski | Category: News

Forex news for North American trading on April 29, 2021

The first take (they call it the "advanced" release) of the 1st Quarter GDP was finally released (it IS the end of April), and the number was a touch lighter than expectations at 6.4% vs 6.6% estimate.  However, personal consumption rose by an impressive 10.7% vs 10.5% estimate.  Inventories was a drag (which may not be a bad thing going forward for growth).  Trade was a drag QoQ as well.  That too may see a rebound if the trade numbers can see a rebound (less of a deficit on a more robust global Covid rebound) going forward.  Overall, a solid start to the year. 

Other data today included the weekly initial jobs data. This week's numbers correspond with the BLS survey week and the claims numbers were the lowest level going back to March last year won the pandemic started to kick in. That should bode well for the next jobs data at the beginning of May.  Pending home sales for March given weaker than expected at 1.9% versus 4.4% expected, but housing data can be difficult to gauge with weather, and the supply and demand conditions. So a gain of 1.9% is still not all that bad.

In other news, earnings for Apple and Facebook, knocked it out of the park after the close yesterday. While Facebook shares soared, Apple shares opened below the after-hours highs, and worked negative by the close (down -0.08%). That price action - and rising yields - were reasons  for a rotation out of the Nasdaq index. The Nasdaq index was up 1.14% at the highs early in the session and reached a low of -0.7% at the low. However, by the end of the day, the major indices rebounded, led by the Dow and S&P which were both up by about 0.7%.  The Nasdaq index ended positive by 0.22%, but given the stellar numbers by Apple, the gains were somewhat disappointing.   In Europe today, most of the indices ended lower with Italy's FTSE MIB being the one exception.

The changes in equity markets
Looking at the key US debt yields, the 10 year yield is ending higher by 2.9 basis points at 1.638%, but that is still well off the high at 1.686%. The 2-10 year spread moved up to as high as 151.4 basis points intraday, but is back down at 147.57 near the close. That is still up from the close yesterday at 144.53. 

US yields are higher
In the forex, the CAD was the strongest of the majors as it continued its run to the upside after the BOC last week announced a taper of their bond buying program.  The JPY was the weakest as it attracting some USDJPY buying on the run up in yields before moving off highs levels as yields stalled and started to come back down. 

Looking the cumulative changes of the USD, the greenback had equal % gains vs % losses.  The dollar rose a cumulative 0.61% vs the JPY, AUD and NZD and a cumulative -0.61% fall vs the EUR, GBP, CHF and CAD with ups and downs intraday.  

The US dollars ending mixed. The Canadian dollar is strongest. The Japanese yen this weakest
Looking at some of the major currency pairs from a technical persective:
  • EURUSD: The EURUSD traded to the highest level since February 26 reaching 1.21494. The move tested a topside trendline the hourly chart at 1.21451, but could not maintain upward momentum. The price rotated lower and corrected 50% of the weeks trading range to 1.21025. Support buyers came in and took the price back up to around 1.2125 before settling at 1.2119 at the close. The closing level is just above the high from Monday's trade at 1.21164. Into the new trading day, the 50% of the weeks trading range at 1.21025 will continue to be eyed along with the rising 100 hour moving average at 1.20943 (and moving higher). If the aforementioned support levels can hold (esp. stay above the 50% 1.21025) and we could see a rotation back toward the highs at 1.21490 before the end of the week tomorrow. 
  • GBPUSD: The GBPUSD broke outside of its 71 PIP trading range in the New York afternoon session on Wednesday (above 1.39286), and moved to a new week high of 1.39692 in the Asian session. The corrective move lower was able to stay above the ceiling from Monday Tuesday and Wednesday until the break at 1.3924 to 1.39286 (the low today was 1.39314). As a result the buyers remain in control. A move below 1.39241 and then the 200 hour moving average 1.3914 and 100 hour moving average 1.39074, would tilt the bias more to the downside. Conversely if the 139 24 – 28 level can hold support, making new highs for the week is not out of the question.
  • USDJPY: The USDJPY rebounded after yesterday's move lower in the New York session. The rise to new highs for the week and to the highest level going back to April 13, saw the pair stall right at the 50% retracement of the range since March 31 at 109.215.  The price rotated back down to the broken 38.2% retracement of the same range at 108.804 and settled at 108.92.  With the price trading between the 38.2% retracement at 108.804 and the 50% retracement at 109.215, the upper and lower extreme levels are the fine going into the new trading day.  Move outside those ranges and we should see further momentum in the direction of the break. 
  • NZDUSD: The NZDUSD moved lower on risk off flows today. However, the price low did find support against the rising 100 hour moving average. That moving average currently comes in at 0.72254.  The price is trading at 0.7240. In the new day, if the price can stay above the 100 hour moving average, the buyers are control. If the price goes back below it, there should be more downside probing into the week's close.  The 200 hour moving average of 0.72049 currently and moving higher, will be a key technical target on the downside going forward. Recall the low from Wednesday's trade bounced off of that moving average line. The lows going back to April 22 and April 23 also found support buyers ahead of the moving average level.
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