The core PCE in the US was not so scary and that sent yields lower and the stocks higher. However, the USD is closing the day higher.
US core PCE fell to 2.8% from 2.9%. The headline number declined to 2.4% from 2.6%. The three-month, six-month, and 12 year inflation rates are all 2.8% or less. That is the good news. The not-so-good news is the core PCE for the month rose by 0.4%.
Looking at the ranking of the strongest to the weakest of the major currencies, the JPY was the strongest after BOJs Takata gave hints toward potential tightening credit conditions. The CHF was the weakest. The USD rose vs the EUR, GBP, CHF and NZD, was unchanged vs the CAD and the AUD and lower vs the JPY.
The strongest to the weakest of the major currencies
For the EURUSD it had an up and down session but is closing below its 200 and 100 day MAs at 1.0825 and 1.0815 respectively (trading at 1.0804). Staying below that level in the new trading day will keep the sellers in control, but given the ups and downs this week, and the relatively narrow range for the week (only around 70 pips), the buyers and sellers are not showing a willingness to move the market much. Will they do it on the last trading day of the week.
The GBPUSD, which is also mired in a narrow up and down trading range this week of about 86 pips, moved back below the 200 and 100 bar MAs on the 4-hour chart at 1.2652 and 1.2626 today. The low of a swing area at 1.2594 needs to be broken to increase the bearish bias for the pair.
The USDJPY is stuck within a swing area going back to October/November 2023 between 149.70 and 150.158. The current price trades at 149.94. Sellers off of the DOJ Takata headline news and then the PCE/claims data, took the price down to a low of 149.20, but, the price snapped back into the swing area range. For the trading week, the highs reached on Monday and Wednesday stalled just under the swing only from February 14 (and high for the year) at 150.869. That ceiling is pretty solid. On the downside, the 38.2% retracement of the February trading range comes in at 148.966. Getting below that level is required to increase the bearish bias.
The USDCHF held near a swing area support at 0.87815 and above its 100-day moving average of 0.8769. Sellers turned buyers in the price raced higher. At the close, the price has now moved above its 200-day moving average at 0.88375. That is more bullish technically going into the new trading day. Staying above that level would have traders targeting the 2024 high at 0.8885
For February, the USD was higher vs. all the major currencies with the following % changes vs the major currencies:
- EUR, up 0.12%
- JPY, up 2.1%
- GBP up 0.32%.
- CHF, up 2.68%
- CAD, up 1.07%
- AUD, up 1.05%
- NZD, up 0.47%
The trade-weighted dollar index rose by 0.6%
Looking at the US stock market today, the NASDAQ index finally closed above its all-time high closing level from November 2021 at 16057.44 (the closing level was at 16091.93). The S&P index flirted with closing at its own new all-time high, backed off by a few points at the end of day. The Dow Industrial Average rose in the last hour of trading to close higher on the day.
All the major indices closed higher for the fourth consecutive month led by the NASDAQ index:
- Dow Industrial Average rose 2.22%
- S&P index rose 5.17%
- NASDAQ index rose by 6.12%
in the US debt market
- 2-year yield 4.622%, -2.5 basis points
- 5-year yield 4.248%, -2.5 basis points
- 10-year yield 4.252%, -2.2 basis points
- 30-year yield 4.381%, -2.8 basis points
For February, yields were higher, as traders took out Fed easings largely the result of stronger-than-expected CPI and employment statistics. The economy remains healthy:
- 2-year yield, +41 basis points
- 5-year yield, +41 basis points
- 10 year yield: +34 basis points
- 30-year yield, +21 basis points
SF Fed Pres.Mary Daly said that Fed policy is a good place. Atlanta Fed Pres. Bostic said that inflation came down much faster than the thought it would. Nevertheless, both SF Fed Pres.Mary Daly and Atlanta Fed Pres. Bostic are not anxious to ease soon (the summer time seems most appropriate). Chicago Fed Pres. Goolsbee was little more dovish warning that if the Fed delayed it could cause damage to employment.
Thank you for your support this month. Good fortune with your trading in March.