Forexlive Americas FX news wrap: Stocks get hammered & close near session lows for 3rd day

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How can you not start the daily and weekly recaps by not talking about the hits taken by US stocks?

For the third day in a row, major indices close at or near their lows. The Dow and S&P had their worst week since October 20, 2020 (the Dow fell 1600 points or -4.57%). The S&P fell -5.68% this week.

The Russell 2000 closed at its 52-week low.

The NASDAQ index is down 15.1% from its all-time high reached in November and is trading at its lowest level since June 2021. On the week, the NASDAQ fell -7.53%.

Technical levels were breached with the 200-day moving average breached in all three major indices.

The stock market took center stage this week, and with the earnings calendar just getting underway (with financials and Netflix largely disappointing so far), one wonders will things get any better?

By the way, the Fed is ready for its interest rate announcement on Wednesday. The chatter focuses on whether they are accelerating the throttling so they might be able to tighten policy faster. The Fed is behind the curve on its inflation mandate, although the yield curve has already caused some of the tightening. Despite this, the Fed is still buying bonds and mortgage-backed securities (which doesn’t make sense).

It’s always at its darkest before pitch black, but the visuals certainly aren’t great.

On other markets:

  • Spot gold is trading down $7.70 to $1831.20. For the week, the price is up $14 after closing at $1817 last week. The peak price reached $1847.94 on Thursday. The low on Tuesday was $1805.78.
  • Crude Oil trades up $0.78 to $84.75. The weekly high hit $87.10 on Thursday, the low today was $82.78 before rebounding higher to close. For the week, this week’s inventory data showed an increase in crude oil and gasoline inventories.


In the US debt market

  • The 10-year yield hit the daily high of 1.902% on Wednesday. Last week, the yield closed at 1.788%. The current yield is 1.758%, down three basis points from last week’s close. The run higher earlier this week fueled the bears in the stock markets. Since peaking and falling, however, stocks have separated from the bond market as traders focus more on how higher inflation will lead to a tighter Fed, which in turn will lead to slower growth and lower stock prices.
  • The two-year yield is trading at 1.004% after hitting Wednesday’s high of 1.076%. Last Friday, the two-year yield closed at 0.969%, so yields are higher in this part of the yield curve.


For the day, the change in returns shows the following:

US yields fall on expectations of slower growth

How has the volatility of the market affected the forex market today?

The CHF and JPY attracted safe haven money today while the AUD, CAD and NZD are shedding such risky outflows from these currencies. The USD got caught between these flows ending the session mixed.

USD ends the session mixed

Some technical levels in game next week:

  • EURUSD: EURUSD took a brief look above its falling 100 hourly MA today. That MA sits at 1.1348 (moving down). The price is just below at 1.1342. For the week, EURUSD is down from last Friday’s close of 1.1414.
  • GBPUSD: GBPUSD approached its 100-day ma today (at 1.3539). Today’s low hit 1.35446. Next week this MA will be a barometer for buyers and sellers.
  • USDJPY: USDJPY held a swing low range between 113.58 and 113.629. The price is trading at 113.68 at the start of the weekend. The swing level will be his barometer for buyers and sellers in the new trading week.
  • USDCAD: USDCAD extends to the highest since Jan 11th and also the 38.2% retracement of the move down from the January high to the January low at 1.25871. The price is currently trading at 1.2580, a few pips below that retracement level. Upside in the new trading week would prompt traders to look towards the 100-day moving average at 1.26182. The price moved below the 100-day moving average on January 11th. A move above it again gives shoppers something to shout about.
  • AUDUSD: AUDUSD is trading up and down near session lows for a week. The low was hit on Tuesday at 0.7169. The high was reached on Thursday at 0.7276. That was just below its 100-day moving average of 0.7277. Yesterday and today, the price has retraced almost the entire move, with the price bottom hitting 0.71709. A move below the 0.7169 level would reinforce the bearish bias, while holding the support could see a rotation higher (why not?).