Forex news for North American trading on October 6, 2021
Coming into the New York trading day, stocks were sharply lower erasing the gains from yesterday. Yields were higher, and energy prices had moved to a new cycle highs.
There was a strong move into the relative safety of the US dollar, JPY and CHF, and a run out of the “risk” currencies including the NZD (despite the hike in rates by the RBNZ overnight) and the AUD. Concerns about Washington. Concerns about China were themes for the flows. The news wanted toward slower growth/higher rates.
However, Russia’s Putin said that “Russia is prepared to stabilize the global energy market”, and that helped to reverse the energy sector. Natural gas prices fell over -12% from its high and looked like it was making a “blow off top”. Crude oil prices fell -2% on the day (and -3.4% from its high). The weekly inventory data in the US also helped out, as it showed a stronger than expected build for the second week in a row.
Later in the day out of Washington, minority leader McConnell said that he would allow Dems to use normal procedures the pass the debt limit (and not look to filibuster).
Those reversals in news and the energy markets, also helped to reverse the US stock market (especially the news out of Washington). The Dow, S&P and Nasdaq all closed positively on the day. That was no small feat as the major indices were down from -1.21% (for the Nasdaq) to -1.34% (for the Nasdaq). The S&P was down -1.28% it’s lows.
At the end of the day:
- Dow rose 103.30 points or +0.3% to 34417.98
- S&P rose 17.9 points or +0.41% at 4363.62, and the
- Nasdaq index rose 68.08 points or +0.47% at 14501.91
If the lows have been made, the washout lower since the all-time high in September saw 75% of the S&P stocks trading below their 50 day moving average. That is the highest percentage of stock below its 50 day average since 2020. The index fell -5.83% from the highs reached on September.
The Nasdaq index, at the lows on October 4, fell -7.93% from its highs reached on September 7. The index could only get to 14259 today while the low from October 4 reached 14181.69.
Over in the US debt market, the longer end of the yield curve turned negative on the day. The short and was still up marginally, but still off their highest levels. The five year yield moved back above the 1.0% level to a high yield of 1.012%, but is trading at 0.9845% near the close.
Looking at some of the major currencies from a technical perspective:
- EURUSD: The EURUSD fell to a new low for 2021 at 1.15284. The New York session saw a small rebound to the upside with the pair moving to NY session highs near the end of day at 1.1559. That takes price within a few pips of the swing lows from last week at 1.1562. A move back above those lows in the new trading day would not necessarily give buyers the go ahead to push higher, but it could see some further upside probing toward the 100 hour MA at 1.15902 (and moving lower) and a key resistance area between 1.16016 and 1.16116. Get and stay above that level and a test of the 200 hour moving average at 1.16282 (and moving lower) would be in play. The EURUSD has not traded above its 200 hour moving average since September 14
- USDJPY: The USDJPY move to session lows and below the 100/200 hour MAs soon after the stock market opened at the 111.24 level. The low price reached 111.194 but quickly rebounded and traded above that moving average line for the rest of the trading day. The high price saw the pair move up to 111.49. It currently trades at 111.41 into the close. In the new trading day, the 100/200 hour moving averages will continue to be the key barometer for both the buyers and sellers. The 200 hour moving average is currently at 111.272 (moving higher). The 100 hour moving averages at 111.223. If the risky feelings and news are behind us, those levels should not be broken. However if the headlines continue to worry the market (and it’s not necessarily a done deal in Washington), a break of those moving averages could see further downside momentum with the 110.943 and the 110.80 levels as the next downside targets.
- GBPUSD: The GBPUSD traded above and below its 100 and 200 hour moving averages for most of the European and New York trading session. The 100 hour moving averages currently at 1.35567 (and moving higher). The 200 hour moving average at 1.3572. The current price is trading above both those moving averages at 1.35864 giving a modestly bullish bias. In the new day, staying above those moving averages is key for keeping that bullish bias. On the topside, traders will be eyeing the 1.36082 level as the next close target. A more important swing area comes between 1.36403 and 1.36537. The high price for the week stalled between those levels at 1.36472 during yesterday’s trade.
- AUDUSD: The AUDUSD fell sharply in the Asian and into the European session today as risk off sentiment prevail. However the low for the day near 0.7225 was just above a key swing area between 0.72199 and 0.72248. The inability to move below that level gave the buyers something to lean against and the price waffled higher. For most the New York session, the price traded above and below its 100 and 200 hour moving averages (200 is at 0.7252, 100 is at 0.72612). The reversal in stocks in the New York afternoon session has sent the pair higher into the close with the price currently trading at 0.7276. In the new trading day stay above the moving averages and traders will line the 38.2% retracement of the September trading range at 0.72864. Above that and the high for the week at 0.73034 would be targeted.
- NZDUSD: The NZDUSD had a case of buy the news, sell the fact after the RBNZ raise rates by 0.25% to 0.50%. The Spike high in the Asian session could only extend toward the 38.2% retracement and the high from Monday’s trade between 0.6976 and 0.69809 (the high reached 0.6979). The Sellers entered and pushed price sharply to the downside and in the process fell below its 200 hour moving average currently at 0.6944, its 100 hour MA currently at 0.69329 and a swing area between 0.6915 and 0.69204. The low price move to test the lows from last Friday’s trade at 0.6877 and found some traders will need to put it on the water. They more helped by the reversing markets which eased the “risk off” flows. Going into the close, the pair has returned back to the swing area between 0.6915 and 0.69204. The current price is trading at 0.6916. If the buyers are to take more control, getting above that area, and the aforementioned of hourly moving averages (at 0.69329 and 0.6944) would increase the bullish bias. Absent that and the sellers are still in control.
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