Article / 27 March 2018 at 22:21 GMT

US Wrap: US dollar rallies, Wall St takes a tumble

FX Trade Strategist /
  • Tech stocks crash and Wall Street sank on Wednesday
  • Mixed US data turned out be a non-factor for forex traders 
  • Pre-month end dealing impacted markets
  • The release of GDP data for the UK could affect GBPUSD today
By Michael O’Neill

NY Focus
: Wall Street is behaving like it's on a trampoline. Tuesday’s bounce and all the optimism that went with it came crashing down on Wednesday. But it didn’t start out that way. The three major indices were in positive territory until lunch time, and then things soured. The Nasdaq plunged 2.93%, erasing nearly all of yesterday’s 3.26%. The drop in stocks drove Treasury yields lower. It wasn’t all bad news. General Electric (GE: NYSE) jumped 4.27% on a rumour that Warren Buffet was taking a look at acquiring a stake in the company.

Trade tensions may have eased somewhat, but they are still on the front burner. Bloomberg reported that the White House is looking at cracking down on Chinese investments in technology.


China's technology-minded population will feel the impact of any moves by Donald Trump to build a great big wall around US technology such as 5G wireless telecommunications. Photo: Shutterstock

The US dollar opened with a bid and Sterling was under pressure. GBPUSD started to slide at the European open, and it kept on going until just after breakfast in New York. Prices bottomed out at 1.4068 and inched higher in the morning, peaking at 1.4172 at noon and trading sideways in the afternoon. There were no particular catalysts for the move although the prospect of pre-month end demand for dollars cannot be ruled out.

EURUSD traded in similar fashion as Sterling. New York inherited a falling EURUSD, which opened at 1.2413. It found support at 1.2373 and bounced back to the opening level at lunch. Prices drifted slightly lower in a dull afternoon session. Soft data releases about the Eurozone may have undermined the single currency. Second-tier US data didn’t play a role.

USDJPY chopped about in a range between ¥105.35 and ¥105.89, finishing the day at the low end of the range due to a whiff of risk aversion stemming from the decline on Wall Street.

AUDUSD opened under pressure and never recovered falling from 0.7724 to 0.7677. NZDUSD bounced in a 0.7260-0.7286 range, pressured by broad US dollar strength.

WTI oil prices broke below minor support at $65.00/barrel and dropped to $64.63/b. Month-end actions and rumours of a large US crude inventory build undermined the oil price. The rumours turned out to be true. API weekly crude stocks change report showed a rise of 5.32 million barrels.

Wednesday Focus: UK GDP for the fourth quarter of last year (forecast at 1.5%, or up 1.4% in y/y terms) along with mortgage approval data and other minor releases could lead to a volatile GBPUSD trading session.

GBPUSD snapped the uptrend from March 19 with today’s break below 1.4185. Further weakness below 1.4065 will extend losses to 1.3920.

Four-hour GBPUSD chart

Source: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more. 

– Edited by Robert Ryan

For more on forex, click here.

Michael O'Neill is an FX consultant, currency strategist and author of the Trade of the Day at Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.
Market Predator Market Predator
Thanks, great as usual. Today, some guys announced their end here on TF. Hope you will keep going Mike!


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