U.S. Market January 2, 2001

The New Year started as the previous one ended, with the USD under pressure against all major currencies. The U.S. stock market continued it’s slide, especially in the technology sector as the Nasdaq composite index closed down 7.23 percent on the day.

The National Association of Purchasing Management index for December was released this morning and showed a reading of 43.7, compared to 47.7 in November. This helped to convince markets that a rate cut will take place by the end of January, and subsequently EURUSD, which early in the day sold off to 0.9385 on profit taking, quickly bounced to retest 0.9500, a psychological level that was very hard to break. It finally broke through and traded to a new high of 0.9516, before closing at 0.9508.

USDCHF opened just below 1.6200 and declined rest of the day to a new low of 1.5990. The 1.6000 offered good support for the remainder of the session however. With limited interest by market participants to put on long USD and JPY positions at the moment, GBPUSD continued it’s impressive rally and managed to climb above 1.5000 and closed at 1.5030. Strong resistance at 115.00 in USDJPY combined with profit taking in the rocketing EURJPY cross, kept USDJPY bulls on the sidelines for the time being. From an opening level of 114.93 it fell to a daily low of 114.25 before bouncing briefly to close at 114.40. The AUDUSD range traded between 0.5572 and 0.5605 all day with a bullish undertone, and NZDUSD remained well bid with an early move from 0.4397 to 0.4454 where it closed.

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