Forex news for NY trading on May 4, 2020
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- US CDC total cases 1,152,372 up from 1,122,486
- Major indices close near session highs.
- The NFL is likely to announce season schedule on Thursday night
- WTI crude oil futures reached $21 in after-hours trading
- US Treasury to sell record $3 trillion in debt from April-June
- We're in the perfect speculative storm and it's a complete game-changer
- WTI C this him him him him him him rude oil futures settle at $20.39
- Fed's senior loan officer survey: Banks tightened lending standards significantly
- Congress won't discuss more stimulus yet - report
- BOCs Wilkins: BOC will do its part to bridge this coronavirus period
- NYT: White House projects a significant rise in US deaths and cases into June 1
- European shares end lower on the day
- Texas Railroad Commissioner confirms that oil quotas are dead
- ETF buying talk from Fed helps to lift sentiment
- White House Navarro: China's handling of pandemic is much broader issue than trade deal
- US March factory orders -10.3% vs -9.4% expected
- Fed's Barkin: Without more support, many employees risk leaving the workforce
- April ISM New York index business conditions 4.3 vs 12.9 prior
- Mnuchin: Trump prepared to back additional stimulus if needed
- Deteriorating US-China relationship in focus as New York begins the week
- The JPY is the strongest and the GBP is the weakest as NA traders enter for the day
The day started with concerns about US China relations. That had US stocks moving lower, crude oil trading back toward $18. US yields were marginally lower. There was a flow into the relative safety of the JPY, with flows out of the GBP and EUR (they were the weakest him at the start of the day).
As the day progressed, the focus turned to more positive expectations that the reopening of the US economy would spur on job gains and stronger economic growth. As a result, despite a -10.3% decline in factory orders (versus -9.4% expected), and a tun up of the heat on China as retribution for the coronavirus, stocks started to recover, oil prices moved higher, and US yields moved higher as well. There also seemed to be an increase of corporate debt offerings with Starbucks and Apple some of the names that looked to tap the debt market while yields are still scraping at lower levels. HMMMM. Will that recovery be better than expectations? Corporate treasurers seem to be positive.
In the forex, however, the flow of funds into the JPY remained, as did the weakness in the GBP and EUR. There was overall a minimal move in the rankings of the major currencies. At the start of the day the JPY, CAD, USD and AUD were the strongest of the majors (in that order), while the GBP, EUR, and CHF were the weakest (also in that order). At the end of the day, the JPY, AUD, USD, and CAD were positive (in that orders) while the EUR, GBP and CHF were the weakest (EUR and GBP swapped places at the bottom of the table).
US stocks move from negative across-the-board to positive across the board was led by the NASDAQ index. At the lows the index was down -0.78%. The closed session up 1.23%. The Dow industrial average trading as low as -1.53% but eked out a small 0.11% gain. European shares did not fare as well, but got off to a slow start thanks to the May 1 all day on Friday. Recall US stocks fell sharply going into the weekend, and those declines led to European shares weakness. A fundamental issue for Europe in general today is the ruling on Tuesday of Germany's constitutional court on the ECB's QE program. If that ruling is negative, it would have major implications for the EU recovery. PS it is not expected to be negative however.
In addition to stocks rebounding, oil prices also staged a late day rebound. The June contract settled at $20.39, but is currently trading up $1.45 or 7.28% at $21.22. Is the gain another indication of hope for a stronger economy going forward and increased demand for oil products? Any reopening, will have workers traveling to work. Any increase in demand is good news given the supply/demand imbalances in the markets currently.
As mentioned above, yields in the US moved higher with the longer end rising the most (and the yield curve steepening). Below are the percentage changes along with the high and low yields. The 5 year, 10 year, and 30 year issue are well off there lows for the day.
Some technical levels to watch in the major currency pairs into the new trading day:
- EURUSD: The EURUSD trended lower into the London session consolidated and then reestablish the downward momentum in the New York session. The prices ending the day below its 100 hour moving average at 1.0907. If the the price can stay below that moving average, the bears would be more control with the 200 bar moving averages on the 4 hour chart converged at 1.0877 as the next downside target. The 200 hour moving average is currently at 1.08602
- GBPUSD: The GBPUSD was also lower on the day but found support against day lower channel trendline and recovered during the New York session. The pair is closing the day near its 50% retracement of the move up from the April 21 low to the April 30 high. That level comes in at 1.24445. The price is also just above its 200 hour moving average at 1.24304 (and rising). The price can stay above those levels, the bulls would have more control with the 100 hour moving average 1.24832 as the next target. On a break of its 200 hour moving average getting below the 1.2400 level would open the door for further downside momentum.
- AUDUSD: The AUDUSD fell below its 200 hour moving average in the afternoon on Friday, and extended lower today, but rebounded in the London and US session. The price is trading near its session highs at 0.64247. Ahead on the topside is the 200 hour moving average at 0.64388. A move above that level would be more positive from a technical perspective.
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