- Stock market close: Nasdaq reverses lower as the consumer crunched
- Nasty day in the markets as the Nasdaq unravels following Nvidia earnings
- US Treasury's Adeyemo: Chinese economy is showing weakness that has global implications
- WTI crude oil futures settle at $79.05
- This is the worst kind of analysis
- European close: Ugly reversal
- Fed's Collins: At this stage it's appropriate to be patient
- Atlanta Fed GDPNow continues to sizzle as it bumps up to 5.9% from 5.8%
- KC Fed August manufacturing index +12 vs -20 prior
- ECB's Centeno: We have to be cautious at the next meeting
- Fed's Harker: The low income consumer is clearly slowing down
- The USD is moving higher vs. the CAD, AUD and NZD today and making some breaks technically
- Former St Louis Fed President Bullard says we are in a higher-rate regime
- Kickstart your FX trading with a technical look at the EURUSD, GBPUSD and USDJPY
- US initial jobless claims 230K vs 240K estimate.
- US July durable goods orders -5.2% vs -4.0% expected
- The USD is the strongest and the NZD is the weakest as the NA session begins
- ForexLive European FX news wrap: Dollar steady, equities higher led by tech after Nvidia
The USD soared as stocks tumbled ahead of Fed Chair Powell's speech at Jackson Hole tomorrow at 10:05 AM ET. The greenback is ending the day the runaway strongest of the major currencies with gains of 1.0% vs both the GBP and the NZD. It was also up 0.93% vs the AUD and 0.79% vs the CHF.
With the economy still showing strong employment and concerns about inflation, fears of inflation or a more hawkish Fed Chair is weighing. Today, the initial jobless and continuing claims both moved lower (initial claims moved to 230K vs 240K estimate). A year ago before the last summit, the unemployment rate was at 3.5% and that is where the rate is currently. Moreover, labor demands are creeping in and are threatening to keep inflation elevated just when goods inflation was starting to show signs of moving lower.
Admittedly inflation (as measured from CPI) is down sharply from around 8.4% a year ago to 3.2% currently, but most of that decline was due to base effects. Those effects have have largely run their course. Yes inflation is down, but it is still 1.2% from the Fed target of 2% which seems the Fed is not in any hurry to abandon or widen.
Although the market is on edge from what the Fed Chair will say, Fed's Harker and Collins did not necessarily ring hawkish bells today when they spoke.
Harker said on policy:
- At this point, I see the Fed holding steady this year. Next year is data-driven.
- I see us keeping rates where they are all this year: if inflation comes down next year, could cut rates.
- Let the restrictive policy stance play out, should lower inflation.
- Policy is in a restrictive stance.
However, he did also say that:
- The Fed must deal with inflation and is dealing with it
- Wants to see softening in the labor market, notably in the service sector
Fed's Collins on policy said that:
- At this stage, it's appropriate to be patient.
- Doesn't think it's helpful to designate a pre-set path.
- We may be near a place where we can hold rates.
- It's likely that we will need to hold for a substantial period of time.
But added that:
- More Fed rate hikes are possible.
In equity markets, Nvidia was the final large cap mover to report earnings after the close yesterday, and they were well above expectations. After trading up over 8% in premarket trading, the stock opened and started to move back down. At session highs the stock was up $31.50 at the close the gain was nearly fully erased, settling up $0.47 or 0.10%. In after hours trading the prices down another $1.72.
That was the good news for the stock market. The not so good news was the 257 point decline in the NASDAQ index or -1.87%. The S&P index fell -1.35% and the Dow industrial average fell -1.08%. Ouch.
In other markets:
- Crude oil is trading near unchanged $78.87 and still below the $79 level
- Gold is up $1.50 or 0.08% at $1916.87
- Silver is down $0.19 or -0.78% at $24.10
- Bitcoin is trading back below the $26,000 level at $25,949
in the US debt market:
- 2-year yield is at 5.025% up 7.3 basis points
- 5-year yield is at 4.416% of 5.5 basis points
- 10-year yield is up at 4.241% up 4.3%
- 30 year yield is at 4.34% up 2.0 basis points
Looking at some of the major currency pairs:
- EURUSD: The EURUSD is closing the New York session near the 200-day moving average at 1.0800 area. The current price is trading at 1.08095. He moved below the 200-day moving average would open the door for further selling. In the New York session a corrective high stall against the higher base swing area near 1.08485. That increases the level of importance going into the new trading day.
- GBPUSD. The GBPUSD is closing below it's 100-day moving average for the 1st time since March at 1.26379 then testing the low of the swing area near 1.25987 going into the close. Staying below the 100-day moving average in the new trading day will keep the sellers in control.
- USDJPY: The USDJPY moved back above the 100 and 200-hour moving average is near 145.60. There is some resistance at 145.90. Get above it and traders with target the swing highs from Monday and Tuesday at 146.40. The high price from the year is 146.554 (the highest level since November).
- AUDUSD: The AUDUSD fell below its 200 and 100-hour moving averages near 0.6432. Staying below those moving averages keeps the sellers more in control in the new trading day
- NZDUSD: The NZDUSD also fell below its 200 and 100-hour moving averages near 0.5940. Like the was AUDUSD, staying below would be more bearish in the new trading day.
Good fortune with you trading.
