Forexlive Americas FX news wrap: Weaker ISM sends the USD lower
Forex news for North American trading on May 3, 2021
- Rotation into the cyclicals and out of tech in stock trading today
- More from Fed's Williams - says that markets seem to understand Fed's rate guidance
- Feds Barkin: Will start to taper when see substantial progress
- U.S. Treasury expects to issue $463 billion in net marketable debt
- More from Feds Williams: Feds main goal is to anchor inflation expectations
- Feds Powell: US economic outlook has brightened but not out of the woods
- US Covid statistics: Cases 36,661 versus 32,452
- Feds Williams: Data/conditions not nearly enough for FOMC to shift its policy stance
- In the category of "for what it's worth", the Atlanta Fed GDPNow rose to 13.2%
- European shares end higher
- Dollar extends lower. GBPUSD above MAs again. EURUSD runs above 100 day MA
- US construction spending for March 0.2% versus 1.7% estimate
- April US ISM manufacturing 60.7 vs 65.0 expected
- ECB bought net 19.0B in PEPP bonds last week vs 22.25B the week before
- Markit US manufacturing PMI for April (F) 60.5 versus 60.6 preliminary
- Canada Markit March PMI 57.2 vs 58.5 prior
- The GBP is the strongest and the JPY is the weakest as NA traders enter for the day
- ISM manufacturing tops the economic calendar with Powell also set to speak
The first day of the calendar month of May saw US ISM date for the month of April come out weaker than expectations at 60.7 vs expectations of 65.0. Moreover, employment was down to 55.1 from 59.6 last month. New orders were also lower 64.3 versus 68.0 last month. Prices paid was higher at 89.6 versus 85.6.
Although the index was still comfortably above the 50 level, the forex market did not take it too well. US yields fell. The 10 year yield reached a high of 1.653%, but retreated to 1.576% before settling near 1.598% - down -2.8 basis points. The 30 year yield fell from 2.325% to 2.252 percent before settling at 2.28%
US stocks saw a flow out of the big cap tech Nasdaq index, and into the cyclicals of the Dow 30. The S&P index is also higher. The NASDAQ index traded as high as 0.57% before reversing and moving down as low as -0.58%. The index settled near the lows at -0.48%. Meanwhile the DOW index never traded negative on the day (nor did the S&P). The Dow gained 0.7%. The S&P rose by 0.31%
The the forex, the lower rates helped to push the dollar down where it was the weakest of the majors in trading today. Recall on Friday, the USD was the strongest of the majors. The GBP is ending as the strongest of the majors.
Below is the rankings of the strongest to weakest.
Looking at some of the major currency pairs from a technical perspective:
- EURUSD: The EURUSD could not get sustain any momentum below a lower swing area between 1.20145 and 1.20209. The low reached 1.20125. The price extended higher and move back above its 100 day moving average at 1.2053 in the New York session. It also traded briefly above the 200 hour moving average of 1.20713. However, in the years afternoon, the price settled between the 200 hour moving average above at 1.20713 and the 100 day moving average below 1.2053. Both of those levels will be eyed in the new trading day. Trade above the 200 hour moving average and then the 100 hour moving average of 1.20832, would be a more bullish shove. Conversely move allow the 100 day moving average 1.20528, and there should be more downside probing.
- GBPUSD: The GBPUSD fell sharply on Friday in a trend -like market. The pair closed near the lows. Today, in the Asian session traders tested the low from Friday at 1.38012 (and the 1.3800 level), and could not extend lower. The orders entered and pushed the price sharply higher over the next nine or so trading hours (into the early New York session). The move higher was able to get back above its 200 and 100 hour moving averages at 1.38944 and 1.3889, but found sellers against a swing area from last week and a downward sloping trendline in the 1.3924 to 1.39314 area. The pair is closing between the moving averages below and the trendline/swing area above. Breaking of one or the other will likely lead to momentum in the direction of the break.
- USDJPY. The USDJPY initially moved higher and away from the 50% retracement of the move down from the March 31 high at 109.215. The high price extended to 109.693, before selling off after the ISM data. the subsequent New York session low stalled near its 100 hour moving average (currently at 108.982) and bounced. The current price is trading around 109.10 into the new trading day. Take a move back below the 100 hour moving average at 108.92 to tilt a bias more in the downward direction. A move above the 50% retracement at 109.215 would be needed to give the buyers more confidence after the sharp fall to moving average support today.
- USDCAD: The USDCAD continue to hold support against the low from Friday's trade at 1.22652. The Asian session low in the NY session low came in just above that level at 1.22685 and 1.2266. That floor will need to be broken the sellers are to take more control in the new trading day. On the topside, the consolidation seen over the last three trading days has allowed for the 100 hour moving average to catch up with the price. It currently is at 1.23145 and moving lower. It will take a move above that moving average level and the 38.2% retracement of the last leg down from Thursday's high at 1.23234, to give dip buyers some needed comfort that they are taking back some control.