Forexlive Americas FX news wrap: Quiet session relatively as markets take a breathe

Author: Greg Michalowski | Category: News

Forex news for NY trading on March 30, 2020.

I know gains of 3.3% to 3.6% in the broad stock indices are not exactly quiet, but relatively, the stock market was more steady (albeit with a bid). In addition, the bond, gold and forex market were just a little less volatile. Even the VIX index, a measure of market volatility for stocks, fell by -8.46 points or -12.91%. It is still high historically at 57.08, but that is well off recent highs of over 85 (from March 18).  

The "markets" may be influenced by month-end/quarter end flows that is expecting to see rebalancing into stocks and out of bonds (we saw that type of flows today).  It may also be reflective of "the market" be more comfortable with the idea that monetary and fiscal policy has thrown everything at the problem and will therefore cushion the fall, and also that some coronavirus numbers showed a steadying/dip from high levels (from Italy, NY, the US).  Now it is way too early to call it a day (way too early), but the "market" does have the right to be more "comfortable".   The goal is to flatten the curve, not stop it in it's tracks.  If that idea starts to show up, traders vision can be very forward looking, and that allows them to see a pin hole of light at the end of a dark tunnel.  

Taking a look at the markets:

  • Spot gold closed down about -$6.50 at $1621. The low reached $1611.93. The high was up at $1639.61
  • WTI crude oil is still having some problems thinking about rallying. Pres. Trump talked with Russia's Putin today, but it seemed little progress was made with regard to the Russia/Saudi price war.   The price is currently trading at $20.28 after closing at $20.09.  Stocks will recover ahead of oil especially with the trajectory of the virus still with a ways to go (even in the best scenario) and a Oil War going on.
As mentioned, stocks rallies strongly today. The major indices in Europe closed at the highs (after being much lower earlier). The US stocks extended even higher and spent most of the day above the 0.0% line (the Dow did dip briefly in the red early in the session).  

US stocks close at the highs.In the US debt market, a late day sell off in the long end (may be that month end rebalancing) saw the 10 and 30 year yields move positive on the day, and well off the low yields for the day.  The 2-10 year spread which moved to around 37.79 basis points at the low, is trading at 46.99 basis points near the close for the day.

The US yields are down mixedIn the forex, the USD was the strongest for most of the day, but lost some value into the close.  The AUD is ending as the strongest and the CAD is the weakest.  The USD is still higher on the day but earlier dollar gains vs the AUD .

The strongest and weakest currencies for the week

  • EURUSD.  The EURUSD fell below the 100 hour MA at the start of the 100 hour MA at 1.1043.  The fall took the price to a 1.1009 area where floor was developed in the NY session. In the late afternoon today, the price moved away from the floor at 1.1009 and moved back above the 100 hour MA near the close.   The 100 hour MA will be a barometer for the bulls/bears in the new trading day. If the price moves lower, a break below the 1.1009 would be more bearish.  Move above the 100 hour MA and extend above the higher 100 day MA at 1.10776 and buyers will be more in control
  • USDJPY. The USDJPY moved higher today after first extending below the 50% of the March trading range at 107.388 in the Asian session and failing.   The rise took the price up to the 200 day MA at 108.293 and backed off. The pair id trading at 107.86 into the new trading day. That is between the 50% retracement below at 107.388 and the 200 day MA above at 108.29.  Look for the pair to respect those levels, but to go with the break.
  • USDCAD: The CAD was the weakest of the major currencies today. The run to the upside in the USDCAD (weaker CAD), saw the pair move up and test the 100 hour MA (at 1.41683 currently) and stalled. The move off the 100 hour MA lower has been modest.  The 100 hour MA is still in play, and will be the barometer for the bulls and bears in the new day. 
  • AUDUSD: The AUD was the strongest of the major currencies today, but was marginally higher vs the USD.  Looking at the chart below, the pair respected a swing level at 0.61827 and swing area at 0.61827 -995 (call it 0.6200).  On the downside, a trend line is moving higher and converging to the aforementioned swing area.  At some point the market needs make a decision to go higher (and move above the topside swing area), or go lower below the lower trend line. Look for the break and run.
The AUDUSD is getting ready to break and run.

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