The British pound ended the US session as the strongest of the major currencies today. The Swiss franc is the weakest. The US dollar ended the day mixed with gains against the Japanese yen and Swiss franc and losses against the British pound, Australian dollar and New Zealand dollar. The US dollar was almost unchanged on the day against the EUR and CAD (-0.05%).
From strongest to weakest among major currencies
During the trading week, the trade-weighted Dollar Index (DXY) fell -0.77% with the index moving to its lowest level since the first week of April. This index also closes below its 100-week moving average at 104.83, after 5 weeks of closing above that average. This shifts the technical bias of the indicator to the downside (staying below is more bearish for the USD).
The dollar index closes below the 100-week moving average
Looking at the major currencies against the US dollar, the percentage changes in the US dollar against each major currency this week mostly show smaller movements for the US dollar. The exception is the US dollar's 0.30% gain against the Canadian dollar.
- EUR, -0.93%
- Japanese Yen, -0.08%
- British Pound, -1.43%
- Swiss Franc +0.30%
- Canadian Dollar, -0.43%
- Australian Dollar, -1.40%
- NZD, -1.92%
The US Dollar's downward move this week got a key boost from a weak CPI, flat retail sales (lower than expected), and a lower New York manufacturing index, all released on Wednesday. A PPI number that was stronger but far from sharp revisions in the previous month opened the door to the downside when it was released on Tuesday.
What doesn't match the fundamentals is that Fed officials remain bullish-focused for longer, while other countries are more inclined to ease conditions early (especially the EU). This may eventually slow the US currency's declines at some point. However, EURUSD closed above the 100-day moving average (USD bearish) at 1.0819 for the first time since March 21 following gains on Wednesday. GBPUSD also closed above the 100-day moving average for the first time since April 9 on Wednesday (and remains above it).
The New Zealand Dollar and the Australian Dollar are also moving away from the 100-day moving average (bearish in dollars). If the US dollar is to move higher again, the dollar must reverse back above the 100-day moving averages on each of these currency pairs.
Looking at US stocks today, the major indices closed mixed with the Dow Jones Industrial Average leading the way. This index closed above a major milestone today above 40K, and also closed at a new record high. On Wednesday, the Nasdaq and S&P both closed at new record highs, and although they were higher during the week, they are closing the day below their record closing levels (marginally).
today:
- The Dow Jones Industrial Average rose 134.21 points, or 40.34%, to 40,003.60 points.
- The Standard & Poor's index rose 6.17 points, or 0.12%, to 5,303.26 points. It closed at a record high of 5,308.14 on Wednesday
- The Nasdaq index fell 12.35 points, or 0.07%, to 16,685.97 points. It closed at a record high of 16,742.39 on Wednesday
The Dow Jones Industrial Average closed higher for the fifth week in a row. The S&P and NASDAQ indices closed higher for the fourth week in a row.
US bond yields close today at their highest levels but remain lower in the week following their decline on the back of CPI/Retail Sales on Wednesday. However, yields rebounded on Thursday and Friday.
For the day,
- The two-year yield is 4.86%, +3.6 basis points
- 5-year yield 4.446%, +4.8 basis points
- 10-year yield 4.421%, +4.5 basis points
- The 30-year yield is 4.561%, +4.3 basis points
For the trading week
- The two-year yield fell -4.3 basis points for the week, but fell -16.6 basis points at the week's low
- The 5-year yield fell -6.8 basis points for the week, but was down -20.0 basis points at the week's low.
- The 10-year yield fell by -7.8 basis points for the week, but was down -18.7 basis points at the week's low.
- The 30-year yield was at -8.0 basis points for the week, but with a decline of -17.3 basis points at the week's low.
Thank you for your support this week. Wishing you and your family a happy and healthy weekend.