Powell does not give bond market the lift it wanted


Forex news for North American trading on March 4, 2021

The markets were geared up for some Powell relief in the bond market during his interview with the WSJ (the Fed is entering a quiet period so this would be the last chance before the FOMC decision later in the month). That relief did not come.  As a result, rates started to move higher (they were marginally lower at the start of the North American session), stocks started to give up gains and turned negative. The dollar turned from modestly lowered, and soared higher. Gold moved lower.   

The stock selling saw the Nasdaq index move down by -3.41% at the lows. If you thought that was bad, the Russell 2000 fell as much as -4.42%. The Dow was down as much as -711 points at the low.  

The Nasdaq 3 day decline has sent the index down -6.506% over that period (the largest 3 decline going back to September 3, 2020). The declines have now erased the gains for the year (the NASDAQ is now down -1.28% on the year).  The Dow industrial average is now the biggest gainer at 1.04% YTD.

US stocks tumbled

 In the forex market, the USD packed on solid gains vs most of the majors. The USD was strongest vs the CHF  (up 1.03%) as the run higher continues in that pair. The price moved up to test the swing highs going back to September 2020 at 0.92956 (the pair is closing the day just below that key target). 

The USDJPY moved up 0.87% and trading to it’s highest cycle high. The pair is trading at the highest level since July 1, 2020 and is looking to get above the 108.00 level also for the first time since July 1, 2020. 

The EURUSD fell back below its 100 day MA and ran (the 100 day MA is at 1.20268 and the EURUSD fell to a low at 1.1961).  The GBPUSD ran up to test its 200 hour MA at 1.4017 just before Powell’s interview, and then tumbled to a low of 1.3880 into the close.  

The US dollar is the strongest

In the bond market, the yields along the yield curve saw the 10 year rise by 7.1 basis point. The 2 -10 year spread widen to 140.92 basis points from 134.01 basis points as concerned about inflation continue to push yields higher.

US yields have moved higher

 In the metals markets:

  • Spot gold is trading down -$13 or -0.76% and is below the $1700 level at $1698.37. 
  • Spot silver tumbled $0.72 or -2.77% to $25.37
  • WTI crude oil futures rose by $2.73 or 4.45% to $64.01. The OPEC+ meeting saw Saudi Arabia keep production cuts in play through April, but allowed Russia and Kazakhstan to raise production marginally. 



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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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