Melt up Monday has turned into Turnaround Tuesday as the US dollar pushed higher from midday today and European bourses drifted off highs. The DAX was down 0.32% at the time of writing and the FTSE 100 had come off its highs by 0.15%.
The index that is bucking the current daily trend is the UsaTec 100 which follows the underlying Nasdaq, as that struggled to get higher than its USA opening initial balance range and then plummeted lower with increasing selling pressure. There was a time that the tech industry would pump higher as a whole but today the largest components are all moving to the downside ensuring that any bullish attempts to go higher from support are quickly absorbed. Apple (AAPL) has fallen through its 2021 opening price which had acted as support back at the end of January, if this continues, we could find ourselves testing the 2021 lows.
Wall Street had started the reduced trading week bullish, with all three leading stock indexes reaching new records as investors resume optimism for stimulus and vaccines. President Biden’s $1.9 trillion coronavirus relief should have all the I’s dotted and all the T’s crossed for a vote next week.
The euro was 0.17% lower against the dollar, having printed 1.2100 while the pound was flat compared to the greenback. Cable is showing that the buyers and sellers are at a point of inflection and maybe that signals the top of this epic bull run. It could also be a pause, as up until today, most market participants were looking for the US dollar bear market to continue. As the US futures markets opened the dollar index was capped at its days high just below the $90.65 level, and significant hourly swing high around $90.75 and once again we see that securities are looking for liquidity zones to try and get a directional move going with some momentum.
Markets could also be positioning ready for tomorrow's FOMC meeting minutes and the press conference that follows. This could be a market mover if there is new information or new signals of possible policy changes in the near future.
Oil markets have also come off their highs a crude is currently trading below $60, whether this is the top is hard to say. However, the industry in America is having a hard time staying open as reports from the likes of Nissan USA are having to shut due to bad weather conditions. This is also affecting refineries and oil output will stall.
Fixed income is certainly moving in a directional way, with the US10 and US30 both continuing their 7-month decline, this is showing up as higher yields as they are inverse to bonds etc., and could be signaling for higher interest rates due to increased inflation when the economies open up again. There was some good data from the NY Fed Manufacturing survey today as it touched a 5-month high.