Forex news for North American trading on June 3, 2020.
- Major indices close higher. S&P on longest winning streak since February
- NASDAQ 100 rises 0.6% to suppress all time closing record
- WTI crude oil futures settle at $37.29
- NYT: China cancel some US farmers shipments
- Trump, Biden nearly even in Texas Quinnipiac Poll
- US CDC Covid 19 numbers for the day
- Federal Reserve expands number and type of entities eligible for MLF
- NYT Pres. Trump selects 5 virus vaccine candidates as finalists
- Gold takes it on the chin today
- WHO chief scientist: No evidence that any drug reducing mortality of patients
- Major European indices close with solid gains once again
- New York Covid 19 virus deaths fall below 50 for the 1st time in 10 weeks
- US 10 year yield rises to 0.757%, up 7.1 basis point on the day
- Bank of Canada gives details of the market operations changes
- DOE crude oil inventories -2077K vs 3000K estimate
- Saudi's propose moving OPEC meeting to mid June
- Full text of the Bank of Canada rate decision
- US factory orders for April -13.0% vs. -13.4% estimate
- Bank of Canada leaves rates at 0.25%, as expected - scales back some market operations
- ISM nonmanufacturing index for May 45.4 vs. 44.4 estimate
- US to suspend Chinese airline passenger flights starting June 16
- Markit May final services PMI 37.5 vs 37.3 expected
- Canada Q1 labor productivity +3.4% vs +2.0% expected
- ADP May employment -2760K vs -9000K expected
- The EUR is the strongest and the AUD is the weakest as NA traders enter for the day
A snapshot of other markets as North American traders look to exit for the day are showing:
- Spot gold tumbled near -$30 on the day or -1.75% to $1697.70 as traders exited the safety of the precious metal. The high price extended to $1732.34. The low reached as low as $1689.56
- WTI crude oil futures fell $-0.20 or -0.54% to $36.61. The high price reached $38.18. The low extended to $35.88. OPEC meeting next week. Russia and Saudi Arabia have agreed in principle to keep production cuts the same for the next month, and roll over those cuts as need be. They need to get inclusion from Iraq, however.
US stocks once again rose sharply. The rotation into the lagging Dow 30 stocks with Boeing leading the way, led to that index doing the best. The Dow rose by over 2.05%. The S&P index rose by 1.36% and the NASDAQ lagged with a gain of 0.78%.
European forces also increased with Germany leading the way for the 2nd straight day (and enjoying +3% gains on each day). The German DAX rose by 3.88%. Below are the percentage changes and percentage ranges for the major European and North American stock indices today.
In the US debt market, yields continued to move to the upside with the yield curve steepening. The 10 year yield rose by 6.7 basis points while the 2 year rose by a lesser 3.0 basis points. The 2 – 10 year spread extended to 56.05% from 52.29% at the close yesterday. The 10 year yield reached the highest level since April 14 in trading today.
Fundamentally in the market today, the ADP employment report - a precursor for the US jobs reports scheduled to be released on Friday at 8:30 AM ET - came in much better than expectations even though job losses totaled more than -2.7 million on the month. That still was much better than the -9 million job loss expectations. Economists were left scratching their heads as the numbers don't necessarily square up to the initial claims figures which have shown a cumulative -40.8 million jobs lost since the Covid crisis started in March. In April, the ADP report showed a decline of -19.557 million.
In other economic data factory orders for April came in near expectations of -13% and the ISM nonmanufacturing index for May can better-than-expected at 45.4 vs. 44.4. So although in contraction it was still a touch better.
The Bank of Canada kept rates unchanged as per expectations but scale back some market operations. The bank as already said that the rate of 0.25% would not go any lower. The commented that the worst case scenario from the April Monetary Policy Report has been avoided. There are still risks but the worst seems to be over in the bank is willing to provide more liquidity in support (sans a rate cut) if need be.
A snapshot of the forex market's winners and losers showed the NZD is the strongest of the majors, while the JPY and USD are the weakest.
Some technical levels to watch in the new trading day:
- EURUSD. The EURUSD extended up to test a swing area in the 1.1238-48 area. The high price extended up to 1.1257, but has since come off and trades at 1.1232 in to the close. In the new trading day, the aforementioned swing area will continue to be topside resistance. Stay below and there could be some profit-taking downside probing. The EURUSD has been up for for 7 consecutive days. During the run to the upside, the price has move from a low on May 25 at 1.0869. To the high today of 1.1257 (388 pips). Does the string extend to 8 consecutive days? If your inclined to trade against trend, selling against the 1.1238 – 48 level would be a logical play from a technical perspective
- USDJPY. The USDJPY extended above its 100 and 200 day moving averages yesterday at 108.30 area. Today the price extended higher to a level of 108.976 (currently trading at 108.91 just off that high). Getting above the 109.00 level is the next upside target. For close support watch 108.8444 bias clues. That is the 50% retracement of the move down from the March 24 high price. A move below (the price stayed above over the last 6 hours of trading today), could see some downside corrective probing, but staying above keeps the buyers in full control.
- GBPUSD: The GBPUSD relative above its 100 day moving average in the Asian session and apart from a single hourly bar, the price stayed above that 100 day moving average at 1.25648 for the entire day. The not so bullish is that the NY saw the price extend above its Asian session high at 1.26097 to a high price of 1.26145, but could not sustain any upside momentum. The price is closing near 1.2575. IN the new day, the 100 day moving average near 1.2564 will be the barometer for both buyers and sellers. Stay above is more bullish. Move below is more bearish.
- USDCAD: As per above the Bank of Canada kept rates unchanged and seem to think the worst is behind. That helped to keep the loonie somewhat bid. However the pair is running into some key support at the 1.34614 level. That is home to the 200 day moving average, and near a high area going back to the end of February and into March. The low price for the day reached 1.3479. That is still 18 or so pips away from the key 200 day moving average but in the new day, if there is more weakness, with the price at 1.3495 currently, testing that level is not that far away. Be aware
