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Forexlive Americas FX News Conclusion May 15: Green Grass Ahead as CPI/Spending Under Control

US CPI, New York retail sales and manufacturing data came in handy with CPI below 0.3%, retail sales showed no gains during the month and New York’s manufacturing day York was weaker. All of this gave a green light to risk assets as yields fell, stocks rose and the dollar fell. Happy days are back.

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

  • The Dow industrial average rose 349.89 points or 0.88% to 39908.01. This was above the previous closing level of 39807.38.
  • The S&P rose 61.45 points or 1.17% to 5,308.14. The index closed at a record high yesterday. Closing in positive territory was therefore sufficient, so 61.45 points was more than enough.
  • The Nasdaq index rose 231.21 points or 1.40% to 16742.39. Like the S&P, it also closed at record highs yesterday. The 231 point gain pushed the new closing high level for tomorrow’s trading.

The Russell 2000 small-cap index also rose sharply (although not to record levels). It rose 23.76 points or 1.14% to 2109.45. The record closing level is still miles away at 2458.85. This implies a further increase of 16.69% from current levels.

For the commercial year, the

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

The Russell 2000 is up 4.06%.

In the United States, the gains were not limited to the American borders. European stocks also rose, with Germany’s DAX, France’s CAC, Britain’s FTSE 100, Spain’s Ibex and Italy’s FTSE MIB also closing at record highs.

On the US debt market, the 10-year yield is down 10 basis points over the day. A look at 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
  • Yield at 30 years 4.503%, -8.9 basis points

The 2-year yield has fallen back below its 200-day moving average at 4.757%. A was trading up 5.04% on April 29.

The 2-year yield is lower than the 200-day MA

For the 10-year yield, it fell to test its 200-day moving average at 4.33% today and stagnated. A move below would tilt the trend further to the downside going forward.

The US 10-year yield is falling

In the foreign exchange market today, the USD was the weakest of the major currencies. The strongest major currencies were the NZD and AUD as risk flows dominated in the major currencies.

From strongest to weakest major currency

For EURUSD, technically the pair’s price has moved higher and away from its 100-day moving average at 1.08235 and also above that 61.8% retracement of the decline from the high from March to 1.0835. The pair advanced into the next target swing zone between 1.0875 and 1.0887. The price is trading during the session in this swing zone. This zone will be a key barometer in the new trading day for both buyers and sellers.

GBPUSD extended above its 100-day moving average of 1.2633 and also the 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 buyers. April 9-10 highs or near 1.2703 and next target.

USDJPY is trading above and below the 38.2% retracement of the trading range from the March low. This level stands at 154.96. This level will be a key barometer on the new trading day for this pair. Since its peak at 160.208, price has retraced over 500 pips but is still off the March low 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 hitting a low of $76.70. Weekly stocks of crude oil and gasoline posted a surprising decline which led to a return to the upside.
  • The risk on sentiment pushed the price of the important backup towards $66,000. The current price is trading at $65,992.
  • Gold is also moving sharply higher, helped by the weak US dollar and falling interest rates. The price is up $27.90 or 1.18% to $2,385.70.

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

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