Forexlive Americas FX news wrap 2 Jan: The USD and yields move higher. Stock lower.

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Forexlive Americas FX news wrap 2 Jan: The USD and yields move higher. Stock lower.

• Stock indices mixed as winners from 2023 falter, unemployment data looms
• NZDUSD sellers extend the corrective move lower and get below the 38.2% retracement
• Crude oil futures settle at $70.38
• USDCAD rebounds from 1.3300, surges to new highs
• EURUSD price analysis: Sharp move lower suggests short-term tilt to the downside
• IMF head Georgieava: Fed is definitely achieving a soft landing
• Latest Atlanta Fed GDPNow estimate shows lower Q4 growth at 2.0%
• USDCHF reverses course in trading today: Short-term technical bias shifts a bit to upside
• Mixed results for major European indices as manufacturing sector contracts
• Top economic releases this week: US jobs report to drive markets
• US construction spending for November 0.4% versus 0.6% expected
• US S&P global manufacturing PMI for December 47.9 versus 48.4 estimate
• Canada S&P global manufacturing PMI for December 45.4 vs 47.7 last month
• The USD is the strongest and the CHF is the weakest as the NA session begin
• ForexLive European FX news wrap: Dollar on the move as stocks slip
• Some never-too-early forecasts for the S&P 500 this year

The first day of the year was met with counter trend moves in yields, the USD and stocks.

For the yields, the USD was mostly lower in 2023 vs the major currencies. The exception was vs the JPY. The NZD and AUD were near unchanged for the year.

Today, the USD is ending as the strongest of the major currencies with gains of over 1% vs the NZD and the CHF leading the way.   The greenback moved the least versus the CAD today with a gain of 0.71%. 

The runup in the USD was helped by higher US yields.  Yields were up and down in 2023, but from October 20 or so, yields moves sharply lower.  For the 10 year, it erased large gains into October that saw the yield move up to 5.02% before tumbling to 3.783%. That took the yield back below the closing level from 2022 at 3.88% before rebounding to close the year at 3.866% - about 2 basis points down on the day.

Today, the 10-year yield followed the USD strength and is closing up 7.5 basis points at 3.935%. 

Looking at the other parts of the yield curve:

• 2-year yield rose 7.4 basis points to 4.324%
• 5-year yield rose 8.5 basis points to 3.915%
• 30-year yield rose 5.9 basis points to 4.076%

Finally, US stocks rose sharply in 2023 and closed the year with a 9 week winning streak. The gains in 2023 were led by the Nasdaq index which rose over 43% on the year.  Today, the fortunes were not so rosy, as it fell -1.63% or -245.42 points to 14765.93. The S&P - which rose to within 3 or so points of the all-time closing level last week at 4796 - fell -27.00 points or -0.57% to 4742.82. 

The one bright spot was the modest rise in the Dow 30 which had a modest gain of 25.50 points or 0.07% at 37715.05.

The catalyst for the moves?

For stocks, Apple received a rare downgrade before the open by Barclay's on concerns for iPhone sales.  That helped to send apple shares down -3.64% on the day.  Other high flyers from 2023 also felt the profit taking pinch:

• Nvidia, -2.73%
• Meta, -2.17%
• Alphabet, -1.09%
• Microsoft, -1.37%
• Adobe, -2.77%
• AMD, -5.99%
• Coinbase fell -9.80% despite Bitcoin trading above $45000 (it is currently trading at $45,213 after trading as high as $45,922).

The rise in rates and the USD may have been on the back of going too far too fast into the year-end. A lack of liquidity can lead to exaggerated moves. That may have contributed to the bounce back higher in yields and the US dollar today. 

One day does not make a trend, but the first trading day of the calendar year does not look like the days leading up to the close for 2023. 

                This article was written by Greg Michalowski at www.forexlive.com.

Source: Forexlive Americas FX news wrap 2 Jan: The USD and yields move higher. Stock lower.

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