News & Analysis

Global markets – US choppy – Europe lower – DAX plunges 185 points; EUR & GBP surge to USD & JPY; Oil jumps adding $1.14; Bitcoin breaks below 9K new 2018 lows

Feb 2, 2018 | Daily Market Outlook

Today’s high impact news:

Ôû©20:30 GBP Construction PMI
Ôû©00:30 USD Average Hourly Earnings
Ôû©00:30 USD Non-Farm Employment ChangeUnemployment Rate

U.S markets – traded in a choppy session on Thursday, the Dow Jones added 37.32, the S&P500 closed 1.83 pts lower and the NASDAQ lost 25.62 points. The traded in a wild session as it rose as much as 157.31 points and traded as much as 134.95 points lower during the day as concern about interest rates continues. Bonds remain in focus, the benchmark 10-year yield rose to trade at 2.784 percent, while the 30-year bond yield topped 3 percent for the first time since May. Thursday marked the first day of the new month. January was the best month for the S&P 500 and Dow since March 2016, while the NASDAQ composite had its biggest one-month gain since October 2015. The S&P 500 also notched its best January performance since 1997. Historically, strong January gains have led to solid gains in the equity market for the rest of the year, according to Howard Silverblatt, the senior Index analyst at S&P Dow Jones Indices. Productivity numbers disappointed on Thursday. The U.S. government said in a preliminary report that fourth-quarter productivity fell 0.1 percent. Economists polled by Reuters expected a gain of 1 percent. Oil rose on Thursday adding $1.14, buyers closing in on $66 in a two-day rally. A survey showed OPEC’s commitment to its supply cuts remains in place maintaining buyer confidence. 66.30 is seen as the main high for buyers to beat. European markets – dived last night, the DAX was the hardest hit as it lost 158.58 points. The FTSE lost 43.16 points and CAC closed 27.38 points lower. Earning misses set the tone for sellers, Spain’s second-largest bank, BBVA, reported a 90 percent fall in fourth-quarter net profit when compared to the same period a year earlier. Euro Zone health – factories across the eurozone grew strongly in January, according to Markit’s latest health check on the sector. The IHS manufacturing PMI came in at 59.6, slightly lower than from December’s record high of 60.6. The data means that euro zone’s factories have been expanding for 55 consecutive months.

Forex – the EURO was last night’s big mover, surging to the USD and JPY. The USD finished mainly lower again overnight but the USDJPY rallied for a 2nd day closing 21 pips higher. The AUD another major that fell to the USD last night losing 19 pips. The AUDUSD has lost 60 pips so far this week, while the EURUSD and GBPUSD have added over 100 pips. CPI being the main miss for the Aussie earlier in the week. The JPY continued its decline, the EURJPY added 129 pips moving above its 136.10 range high. The GBPJPY added 106 pips making a new high for 2018 at 156.44. Despite GBP strength the EURGBP rallied closing 19 pips higher, cementing the EURO’s strength last night. Gold traded higher closing $4 higher after testing yesterday’s opening price $7 below. USD weakness helped the yellow metals turn-around. We see 1350.25 as short-term resistance. Bitcoin failed to hold support falling to new 2018 lows. Sellers took price below 9K last night. If current momentum continues 7K area could be revisited. Price is trading lower again this morning at November 2017 levels.

Non-farm payrolls are due tonight at 00:30 AEDST, traders should expect quieter trade in the lead up to its release. The markets is expecting 181K

EURJPY – broke out of its range last night, once buyers beat 136.10 they didn’t look back as price rallied to a 136.95 high. The E/J is trading at levels not seen since 2015.

Good trading from Eightcap.

Sources; CNBC. All times are AEDST

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