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America

For the third day in a row, stocks are battered and close near session lows.

For the third day in a row, the main indexes are closing at or around their lows. The Dow and S&P 500 suffered their lowest week since October 20, 2020. (the Dow fell 1600 points or -4.57 percent ). The S&P 500 lost -5.68 percent for the week.

The Russell 2000 ended at its 52-week low.

The NASDAQ index is down 15.1% from its all-time high hit in November and is trading at its lowest level since June 2021. The NASDAQ plummeted -7.53 percent last week.

Technical levels were violated, with the 200-day moving average breached in all three major indexes.

The stock market was the focus this week, and with the earnings season just getting started (with mainly disappointing results from financials and Netflix thus far), one wonders if it will get much better.

By the way, the Fed is scheduled to make a rate announcement on Wednesday. The talk is about whether they will accelerate the taper so that they may tighten policy sooner. In terms of its inflation mandate, the Fed is behind the curve, while the yield curve has already tightened. Nonetheless, the Fed continues to purchase bonds and mortgage-backed assets (which does not make sense).

It’s usually darkest before it gets pitch black, but the optics aren’t fantastic.

Other markets:

•Spot gold is down $7.70 to $1831.20. The price is up $14 for the week after closing around $1817 last week. On Thursday, the peak price hit $1847.94. On Tuesday, the low price was $1805.78.

• Crude oil is down $0.78 to $84.75. The week’s high was $87.10 on Thursday, and the low was today at $82.78 before recovering higher into the close. This week’s inventory statistics revealed increases in crude and gasoline supplies.

US debt market

• On Wednesday, the 10-year yield reached a day high of 1.902 percent. Last week, the yield was 1.788 percent. The current yield is 1.758 percent, down three basis points from the previous week’s finish. The stock market’s recent surge to the upside has energised the bearish.

• However, since peaking and falling, stocks have separated themselves from the bond market, as traders have been more concerned on how greater inflation will lead to a tighter Fed, which will lead to weaker growth and lower stock prices.

• The two-year yield is currently trading at 1.004 percent, having reached a high of 1.076 percent on Wednesday. The two-year yield finished at 0.969 percent on Friday, indicating that rates are higher in that area of the yield curve.

• The CHF and JPY drew safe-haven money today, while the AUD, CAD, and NZD received risk-off flows. The USD got caught in the middle of these flows and ended the session mixed.

Some technical levels in play for next week:

• EURUSD: The EURUSD briefly traded above its falling 100-hour moving average today. This MA has a value of 1.1348. (and moving lower). At 1.1342, the price is slightly below it. The EURUSD is down for the week after ending at 1.1414 on Friday.

• GBP/USD: The GBPUSD got closer to its 100-day moving average today (at 1.3539). The low for the day was 1.35446. That MA will be a benchmark for buyers and sellers next week.

• USD/JPY: The USDJPY traded in a range of 113.58 and 113.629. The price is currently trading at 113.68 as we enter the weekend. In the coming trading week, the swing level will serve as a gauge for both buyers and sellers.
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• USD/CAD: The USDCAD has risen to its highest level since January 11, as well as the 38.2 percent retracement of the move from the January high to the January low, at 1.25871. The price is presently trading around 1.2580, which is a few pips below the retracement level. Traders will be expecting for a move higher in the next trading week, with the 100 day moving average at 1.26182. On January 11, the price fell below the 100-day moving average. A repositioning above gives the purchasers something to brag about.

•  AUD/USD: After a volatile week, the AUDUSD is trading at session lows for the week. On Tuesday, the lowest price was 0.7169. On Thursday, the price touched a high of 0.7276. At 0.7277, it fell barely shy of its 100-day moving average. The price retraced practically the whole advance yesterday and today, with the price low reaching 0.71709. Moving below 0.7169 would enhance the negative bias, while holding support might result in a rotation back up.