Forexlive Americas FX news wrap: End of month flows go into stocks and out of the dollar

The last day of a long month saw the USD go lower while US stocks moved sharply higher. That was opposite for the month which saw the dollar index move higher and stocks go lower.

Perhaps that is a prelude into February, or it may have just been a corrective move from over bought (for the dollar) and oversold (for the stocks). Time will tell, but for today, dollar lower and stocks higher were the trends for the day.

Forex

The strongest to the weakest of the major currencies

Looking at the strongest to the weakest, AUD was the strongest of the major currencies ahead of their interest rate decision in the new trading day where rates are expected to remain unchanged, but bond buying is expected to be concluded.

The USD is the weakest currency of the day, followed by the JPY as “risk on” flows sent investors out of the relative safety of those two currencies for the day.

In the US stocks, the S&P and Nasdaq had their best two day gains since November 2020, but they also had their worst month since March 2020 highlighting the dichotomy of the last two days vs the rest of the month (and uncertainty going forward).

For other markets:

  • Spot gold is trading just below $1800 at $1796.80. That is up $5.87 or 0.33%. For the month, the price closed last month at $1829.24 and moved to a high of $1853.83, but reached a low at $1778.50. The decline was 1.77%
  • Spot silver is unchanged at $22.43. On December 31 it closed at $23.29. So like gold it is closing lower on the month. The high reche $24.699 while the low extended to $21.957. The decline for the month was 3.6%.
  • Crude oil is closing nearer the highs for the month at $88.09. That is up $1.29 on the day. The end of year saw the price close at $75.35 which was close to the low for the year at $74.30 reached on the first trading day of the year. The high for the month was also a 7 year high at $88.82. At $88.09, the price is up $13.79 on the month or +18.3%
  • Bitcoin is trading at $38,458. It closed at $46213 on December 31. The high for the month reached $47989 on the first trading day of the month and reached a low at $32950.72. at $38458, the price is down $7755 or -16.78%

In the US debt market, yields are ending the day mixed but up on the month. Below are the changes for the day.

US rates

US rates are mixed on the day

For the month, the yields were higher from year end levels:

  • 2 year yield went from 0.736 to 1.815% today. The high yield for the month reached 1.228%
  • 5 year yield went from 1.265% to 1.6135% today. The high yield for the month reached 1.701%
  • 10 year yield went from 1.514% to 1.782% today. The high yield for the month reached 1.902%
  • 30 year went from 1.905% to 2.113% today. The high yield for the month reached 2.215%

In the US stock market, although gains were solid for the 2nd consecutive day, the major indices all ended the month lower:

  • Dow fell -3.32%
  • S&P fell -5.26%
  • Nasdaq fell -8.96%
  • Russell 2000 fell 9.7%

In Europe and Asia for the month:

  • German Dax fell -2.6%
  • France’s CAC fell -2.15%
  • UKs FTSE 100 ros 1.08%
  • Spain’s Ibex fell -1.16%
  • Italy’s FTSE MIB fell -1.95%
  • Japan’s Nikkei fell -6.62%
  • Shanghai composite fell -7.65%

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