Forexlive America FX news wrap: The GBP ends the month as the strongest of the majors
The forex news for North American trading on January 29, 2021
- Fed's Kaplan: More fiscal aid will create positive upside to forecast
- Major indices close down -2% on the day
- CFTC Commitments of Traders: Dollar remains short across the board
- Vix volatility index on pace for the biggest weekly surge since June
- WTI crude oil futures settle at $52.20.
- The earnings calendar for next week includes Amazon, Alphabet, PayPal, Chipotle
- Fed's Kaplan: 1Q will be very challenging, but will have positive GDP growth
- Baker Hughes oil rig count 295 vs. 291 estimate. Last week 289
- Pfizer CEO: high possibility future variant will elude vaccines
- Pres. Biden: Cost of inaction on stimulus is high and growing every day
- European shares end a down week with the declines
- White House: US China trade deal among issues under review
- US pending home sales -0.3% vs -0.5% estimate
- University of Michigan sentiment index for January (F) 79.0 vs. 79.3 estimate
- US SEC: Closely monitoring extreme price volatility of certain stocks
- Citron gives up, won't offer short-selling research
- Market reconsiders Johnson & Johnson vaccine news
- Personal spending for December 2020 -0.2% vs. -0.4% estimate. Personal income +0.6%
- US employment cost index for the 4th quarter 0.7% vs. 0.5% estimate
- Canada November GDP +0.7% m/m vs +0.4% expected
- The NZD is the strongest and the JPY is the weakest as NA traders enter for the day
It was a relatively quiet day for the meme stocks, after yesterday's volatile price action following the restrictions on trading by RobinHood and others. The relative calm in the meme stocks, did not stop the major US indices from moving sharply to the downside and closing down near -2%.
A comment from Pfizer's CEO accelerated the decline after he said "there is a high possibility that future variants will elude vaccines".
That is not good for markets that are more focused on seeing the light at the end of the tunnel from the vaccines, vs. seeing another train light coming in the opposite direction straight toward a mid tunnel collision as a result of another variant that does not stop the Covid spread.
At the lows, the Dow industrial average was down -747 points. It closed down -620.74 points (-2.03%). The NASDAQ index was down -352 points before closing at -266.47 points (-2.0%). The S&P was down -93.26 points before closing at -73.14 points (-1.93%).
Today was month and then the major US indices closed mixed with the NASDAQ index rising by 1.42% while the Dow industrial average fell -2.04% and the S&P index fell -1.1%. European shares for the month of January got off to a slow start with all declining. The France's CAC led the way with a -2.74% decline. Asian-Pacific shares increased with the Japan's Nikkei up 0.8%. The Shanghai composite and Australia's S&P/ASX 200 index eked out small gains (0.29% and 0.30%).
In the Forex today, the CAD is ending as the strongest of the majors, while the AUD and JPY are the weakest. The USD had in other volatile up and down trading session in most of the currency pairs, but largely waffled sideways while stocks did their nosedive in the New York afternoon session.
For some specific currency pairs:
- EURUSD. The EURUSD had a down, up and down day, closing up about 15 pips on the day when all was said and done. The pair spent the last 5 or so hours trading mostly between its 100 hour moving average at 1.21269 and 200 hour moving average at 1.21360. In early trading next week, moving higher above the 200 hour moving average are lower below the 100 hour moving average will be the early bias shift.
- GBPUSD. The GBPUSD is another pair that saw up and down volatility today. It is also closing right around its 100 hour moving average at 1.3698 after falling to test its 200 hour MA at 1.36888 in the last hour of trading. The pair is closing down around -17 but traded both higher and lower intraday.
- USDJPY. The USDJPY in the Asian session moved to the highest level of the month at 104.934. In the process, the price moved above its 100 day moving average for the 1st time since June 2020. The 100 day moving averages at 104.399. The pair closed the day at 104.66. In the new trading week, the buyers are in control above its 100 day moving average. On the topside the 38.2% retracement of the move down from the June 2020 high cuts across at 105.358. It's 200 day moving average (also not broken since early June) is up at 105.616.
- NZDUSD: The NZDUSD joins the EURUSD and GBPUSD as a pair where the price is closing near their 100 and 200 and 50% retracement The 100 hour moving averages at 0.71855. The 200 hour moving averages at 0.71807. The price is closing at 0.7189, just above the moving average levels. Needless to say those moving averages will be the barometer's for both the buyers and sellers in early trading next week
- The US employment cost index for the 4th quarter was greater than expected at 0.7%
- US personal income rose by 0.6% but personal spending fell by -0.2% (and has been lower for 3 consecutive months). PCE inflation data remains tame at 1.3% for the headline number and 1.5% for the core deflator.
- US pending home sales fell from the 3rd consecutive month but were slightly better than the expectations at -0.3% vs. -0.5%. You are near however, pending home sales are up a large 22.8%.
- US consumer sentiment as measured by the University of Michigan dipped to 79.0 from the 79.2 preliminary estimate. Consumer sentiment is down from 81.8 in October 2020 and remains way below levels seen in from 2015 to the Covid plunge in March April 2020.