Forex news for NY trading May 13, 2020.
An overview of the other markets of the day shows:
- Spot gold, +1229 points or 0.76% at $ 1,715.60. The low price reached $ 1,699.31. Highest reached $ 1,718.53
- WTI’s July crude oil futures contracts fell $ 0.30 or -1.14% to $ 26.04. The high price extended to $ 26.96. The low price fell to $ 25.25. Like the day the Department of Energy announced it would buy up to 1 million barrels of crude for the strategic oil reserve.
Today’s big event was the virtual event with Fed President Jerome Powell. In the event that Powell has warned that there is more danger coming from the coronavirus. He added that “recovery can take time to gain momentum, and the passage of time can turn liquidity problems into solvency problems”.
He also passed the baton to Congress saying:
Additional budget support could be costly, but it is worth it if it avoids long-term economic damage and leaves us with a stronger recovery. This compromise is one for our elected officials, who have powers of taxation and spending.
That said, Fed Powell is not going to sit idly by. He did everything necessary within the framework of the Fed’s mandate. However, this mandate may be limited. He also indicated that moving rates to negative territory was not being considered, although he did not stop declaring it completely negative.
On the economic front, the producer price index for April fell more than -1.3% than expected (against -0.5% estimated). Ex food and energy decreased by -0.3% and ex food and energy, trade decreased by -0.9%.
Powell’s comments (and the drop in producer prices) did not go well with the stock market. The main indices fell, the Dow’s industrial average being the worst. The latest figures show:
- S&P Index, -1.75%. Lowest reached -2.68%
- NASDAQ index, -1.55%. Lowest reached -2.78%
- Dow industrial average, -2.17%. Lowest reached -2.93%
European indices also ended the session down, the French ACC leading the climate to -2.85%.
The 2-10 year spread contracted to 49.16 basis points from 50.62 basis points at the close yesterday.
On the foreign exchange market, the NZD was the weakest currency on the run (and the biggest driver) as it continued its negative reaction after the RBNZ almost doubled QE to NZ $ 60 billion. The NZDUSD pair fell below the level of 0.6000 to a low of 0.5979. There is trend line support on the hourly chart and a swing bottom since April 24 at 0.5975. Descend below and the downward trend continues. A move above 0.6000-0.6010 could see short coverage in the new day.The JPY and the USD were the strongest of the major currencies.
Some technical comments before the new day:
- EURUSD: EURUSD had a day of trading from top to bottom. The initial low of the first European session stalled against the moving average of 100 hours. The price rebounded from 1.0830 to a high of 1.0896 in New York (just below the level of 1.0900). The following fall fell below the 100-hour moving average currently at 1.0835 and ends the session near the day’s lows at 1.0819. It would take a return above the 100-hour moving average to further tilt the upside bias on the new trading day. On the downside, falling below 1.0808 and an upward trend line at 1.0798 would open the door to a new test of yesterday’s lows at 1.0784.
- GBPUSD: The GBPUSD was another pair that initially saw an upward momentum in trading today. However, resistance before its 100-hour moving average blocked the rally (the 100-hour MA is currently at 1.2337) and the Asian session low and April 21 swing low were broken at 1,2246-50. In the new day there is support at the natural level of 1.2200 and resistance against the aforementioned area at 1.2246 – 50.
- USDCHF: The USDCHF (another pair that turned today) fell first to test yesterday’s low price at 0.9664. Buyers have relied on the low level and are pushing the price above technical levels, including the 100-day moving average at 0.96857, the 200-hour moving average at 0.97027 and the 100-hour moving average at 0.97106. It will take a return below the 100-hour moving average to harm the upside bias. On top, the pair is currently testing a trend line above 0.9722. A move above this level would be more bullish with 0.9736 and yesterday’s high at 0.9749 as the next upside.
Below is an overview of the percentage changes of the major currencies relative to each other, as well as the ranking of the strongest to the weakest of the day. If you have cumulated the percentage changes for each of the majors, the New Zealand dollar was the only pair with a cumulative decline.
