Forexlive America’s FX news wrap: GBP runs higher. JPY runs lower


Forex news for North American trading on May 27, 2021

A look at markets as the day comes to a close:

  • Spot gold is trading up $0.92 or 0.05% at $1897.60. The high for the day reach $1903.70. The low extended to $1888.34.
  • Spot silver is hub $0.17 or 0.64% $27.85. The high for the day reached $27.88. THe low extended to $27.49.  
  • WTI crude oil futures are up $0.60 or 0.91% at $66.81
  • The price of bitcoin is trading marginally lower at $38,647, $-115 or -0.31%. The high price today at $40,440 stalled just ahead of its 200 day moving average near $40,750, keeping the sellers more control

The GBP and the JPY were the big movers today. Versus the USD, the GBP was sharply higher (lower USD) on the back of BOE’s Vlieghe comment that an early rate hike is possible if there is smooth transition from furlough. The JPY meanwhile was sharply lower vs the USD as traders reacted to higher yields, and some break away technicals.  

Month end flows may have also been in play in the forex market (and other markets for that matter.  The month end is not until Monday, but both the US and UK will be closed on Monday due to a holiday.  As a result, month end flows could have been playing a bigger role in the markets today (and will likely be the same tomorrow as well). 

The USD was mixed to lower today with declines vs the GBP (-0.59%), JPY (-0.40%), NZD (-0.21%) and CHF (-0.17%), and a gain only vs the JPY (+0.60%). The greenback was near unchanged verse the EUR and the AUD.  

In the US debt market today, yields moved higher, but did come their highest levels after a successful seven year note auction (tail of -0.6 bps, bid to cover comfortably above the six month average signaling strong investor demand).  Nevertheless, the 10 year yield is up close to 2.9 basis points.

US rates were higher In the US and European stock indices today, results were mixed.  In the US, the NASDAQ index fell marginally. The Dow and S&P were up marginally. The small-cap Russell 2000 rose by around 1.07%.

In Europe, the German DAX, UK’s FTSE 100, Spain’s Ibex or lower on the day, while the France’s CAC, and Italian FTSE MIB rose.

Below are the changes, highs and lows and percentage highs and lows for the major indices.

Stocks were mixed

Some key technical levels going into the new trading day for some of the major pairs.

  • AUDUSD: The AUDUSD traded mostly below its 200 hour moving average above at 0.77564 and its 100 day moving average below at 0.77253 (there was only a 2 pips move below the 100 day MA today and an even smaller break of the 200 hour MA above). The pair’s 34 pip trading range was half of the 22 day average of 68 pips. All that suggests that in the new day, the price will extend either above 200 hour moving average resistance or below the 100 day moving average support. Traders will look for a break in the shove in the direction of the break
  • USDCHF: The USDCHF is trading just above its 100 hour moving average at 0.89668 after an up and down trading day. A break below the 100 hour moving average and then below the low for the day at 0.8959, would have traders looking toward the lows for the week down to 0.8930. Holding support at the 100 hour moving average of moving above the 200 hour moving average at 0.8982, should solicit buyers once again.
  • GBPUSD: The GBPUSD move up to a high price of 1.4219. That just short of the May 18 swing high of 1.42193. Above that, is the May 21 swing high at 1.4233. The current price is trading just above the 1.4200 level. The close support is at 1.41937 to 1.4200.  If that area can hold support, a move to test the May high at 1.4233 would be eyed.
  • USDJPY:  The USDJPY trended sharply to the upside today and in the process took out the high price for the month of May at 109.78. The current price is just above that level at 109.828. Traders will I that old high for intraday clues.  Stay above is the most bullish scenario.  Start to trade below and stay below, and there is likely to be some back filling of the sharp gains seen in trading today.
  • EURUSD: THe EURUSD chopped up and down in a narrow trading range today (40 pips vs an average is 69 pips over the  last month).  The high price today stalled right at its 100 hour moving average (currently at 1.2214).  ON the dowside a swing area between 1.21738 and 1.2181 stalled the fall today. So although the range was narrow, the high and low respected the technical levels. Can that continue in the new trading day?  Not likely so look for a break and run.  

Tomorrow, the Fed’s preferred measure of inflation (PCE) will be released with expectations for a year on year increase to 3.5% for the headline number and 2.9% for the core. The core increases up from 1.9% in March but the rise is reflective of the base effects mostly. The Fed has said numerous times that they would not react to what they consider transitory inflation. However will the market? Be aware.

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