Forex news for NY trading on February 23, 2018.
- It feels like the old days. Stocks surge higher.
- SF Feds Williams: US economy improving broadly across sectors
- CFTC Commitments of Traders: Small changes in the week. EUR longs and JPY shorts remain big positions
- Bitcoin back below $10,000 and trades in the red for the day after rally fades.
- ECB Cœuré: Not eager to engage in early normalization of rates
- Gates pleads guilty to lying and conspiracy charges
- Pres. Trump: The only thing that can get in the way of good US-China relations is trade
- US crude oil futures settle at $63.55/BBL
- What to look to in next week's trading
- Fed's Mester: Labor market strong, inflation expected to rise to 2%
- EUs Tusk speaks after the conclusion of budget summit
- Baker Hughes oil rig counts 799 vs. 798 last week
- Doublelines Gundlach. Bond yields make sense to me but could break higher
- US Mnuchin: Any company that helps N. Korea weapons program, will not be allowed to do business
- NY Fed GDP Nowcast forecast for 1Q remains steady at 3.1%
- European stocks end mostly higher as the week comes to a close
- Even more Rosengren and Dudley: We should not care about treasury yields alone
- Fed Mon. Policy Report: Economic strength will warrant further gradual hikes
- More from Rosengren and Dudley
- Trump: Which would you rather have 2nd amendment or tax cuts?
- Rosengren: Likely to have low real rates for some time
- Former campaign aide Rick Gates to plead guilty in US special counsels Russia probe
- Pres. Trump: He is launching largest ever set of new sanctions against North Korea
- Fed's Powell testimony to be rescheduled to Tuesday Feb 27
- Canada January consumer price index 1.7% vs +1.5% y/y expected
- The GBP is the strongest (but don't blink). The NZD is the weakest
A snapshot of other markets near the end of week is showing:
- Spot gold down $-2.94 or -0.22% at $1329.26
- WTI crude oil futures are trading up $.89 or 1.34% at $67.28
- Bitcoin - the thing that never closes - is traded at $10,000 up $84 on the day.
Good golly! The stock market reminded me of a lot of days in 2017. Today the major indices soared from 1.39% for the Dow to 1.77% for the Nasdaq. The S&P did ok with a gain of 1.60% at the close.
The catalyst? There was no economic data out of the US, but there was some Fed members speaking and the Fed's Monetary Policy Report - a report prepared by the Fed ahead of Fed Chairs testimony next Tuesday. The Fed comments and the report did not scare the market into thinking a tighter than expected Fed was on the horizon (i.e more than 3 hikes in 2018). What you know does not really scare you. Plus yields were heading back down.
- 2 year 2.238%, down -1 basis point
- 5 year 2.618%, down -3.7 basis points
- 10 year 2.866%, -5.5 basis points
- 30 year 3.154%, -5.2 basis points
Later toward the close, one of the hawks on the Feds board, John Williams spoke, and although he spoke a little more hawkishly about the economy, he did say that "the Feds guidance calls for gradual rate hikes and he expects that too". That's not scary. The market can certainly handle 3 tightenings, and lower rates today were a relief.
Now, it was a good day for stocks and bonds (if you were long both), but the markets are not necessarily out of the woods.
For example, the S&P index still remains below its 200 hour MA at 2755 and the yields remain nearer multi-year highs (the 10 year traded at the highest yield since January 2014 earlier in the week). In addition, treasury auctions this week, got a combined grade of "C", indicative of slowing demand just when the supply is coming to the market. However, for the day at least, the stock and bond markets were on fire (or at least very warm).
How did that translate into the forex?
The USD is ending the day higher but off the highs for the day. That is in the aggregate. However, it was mixed overall. The greenback rose the most vs the NZD (up 0.67%). That was interesting as retail sales in NZD were reported better than expectations. The dollar lost the most vs the CAD (down -0.53%). At least in Canada, higher than expected CPI was a fundamental reason to buy the CAD. Having said that, the earlier tumble in the USDCAD (higher CAD) was nearly all the way reversed before moving back down into the week's close.
The other pairs vs the dollar saw more modest changes with gains of 0.32% vs the AUD, 0.31% vs the EUR and 0.28% vs the CHF. The GBPUSD and the USDJPY were nearly unchanged at the end of the day/week.
So it was a day for the stocks and bonds.
Next week, the forex market will get to hear from the new Fed Chairs mouth for the first official time when he testifies on Capitol Hill on Tuesday (that is moved up from Wednesday). Wishing you all a happy and healthy weekend and thank you for your continued support.
