Forexlive Americas FX news wrap 15 May: Green grass ahead as CPI/spending is tame

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The US CPI, retail sales and NY manufacturing data cooperated with CPI coming in on the lower side of 0.3%, retail sales showed no gain in the month and the NY manufacturing day was weaker. All of that gave the green light for the risk assets as yields moved lower, stocks soared and the USD tumbled. Happy days are here again.

For the US stocks, the sharp rise in the indices sent the 3 major indices ALL to record closing levels.

  • Dow industrial average rose 349.89 points or 0.88% at 39908.01. That was above the prior high closing level of 39807.38.
  • S&P rose 61.45 points or 1.17% at 5308.14. The index closed at a record level yesterday. So closing in positive territory was good enough so 61.45 points was more than good enough.
  • Nasdaq index rose 231.21 points or 1.40% at 16742.39. Like the S&P, it too closed at record levels yesterday. The 231 point gain upped the new high closing level for tomorrow’s trading.

The small-cap Russell 2000 index also rose sharply (but not to record levels). It rose 23.76 points or 1.14% at 2109.45.. The all-time high closing level is still miles away at 2458.85. That implies another 16.69% rise from the current levels.

For the trading year, the

  • Dow is now up 5.89%
  • S&P index is up 11.29%
  • NASDAQ index is up 11.53%

The Russell 2000 is up 4.06%.

Gains in the US were not limited to the US borders. European shares also moved higher with the German DAX, France CAC, UK FTSE 100, Spain’s Ibex, and Italy’s FTSE MIB closing at record levels as well,

In the US debt market, the 10-year yield is down 10 basis points on the day. A snap shot of the yield curve shows:

  • 2 year yield 4.723%, -9.5 basis points
  • 5-year yield 4.343%, -11.5 basis points
  • 10 year yield 4.343%, -10.1 basis points
  • 30-year yield 4.503%, -8.9 basis points

The 2-year yield moved back below its 200 day moving average at 4.757%. A traded as high as 5.04% on April 29.

2 year yield is below the 200 day MA

For the 10-year yield it moved down to tests its 200 day MA at 4.33% today and stalled. A move below would tilt the bias more to the downside going forward.

US 10 year yield is lower

In the forex market today, the USD was the weakest of the major currencies. The strongest of the majors were the NZD and the AUD as risk-on flows dominated in the major currencies.

The strongest to the weakest of the major currencies

For the EURUSD technically, the pairs price moved up and away from its 100-day moving average at 1.08235 and also above it 61.8% retracement of the move down from the March high at 1.0835. The pair has moved up into the next target swing area between 1.0875 and 1.0887. The price is trading at session within that swing area. That area will be a key barometer in the new trading day for both buyers and sellers.

The GBPUSD extended above its 100-day moving average of 1.2633 and also it 61.8% retracement of the 2024 trading range at 1.26659. The current price is trading at 1.2684. Staying above the 61.8% retracement is the best-case scenario for the buyers. The swing highs from April 9 and April 10 or near 1.2703 and the next target.

The USDJPY is trading above and below the 38.2% retracement of the trading range since the March low. That level comes in at 154.96. That level will be a key barometer in the new trading day for that pair. Since peaking at 160.208, the price has retraced over 500 pips but is still say off the low from March at 146.47 (with the 50% midpoint at 153.34).

In other markets today:

  • Crude oil is trading up $0.83 or 1.06% at $78.85 after trading as low as $76.70. The weekly inventories in crude oil and gasoline showed a surprising drawdown which led to a rotation back to the upside.
  • Risk on sentiment sent the price of big point backup toward $66,000. The current price is trading at $65,992.
  • Gold is also moving sharply higher helped by the lower US dollar and lower interest rates. The price is up $27.90 or 1.18% at $2385.70.

Thank you for your support. Good fortune with your trading.

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