News & Analysis

U.S Stocks rebound – Europe Mixed; Fed leaves rates unchanged; USD mixed post FED – JPY decline boosts GBPJPY; Gold – Oil higher. Bitcoin holding at 10K.

Feb 1, 2018 | Daily Market Outlook

Today’s high impact news:

Ôû©20:30 GBP Manufacturing PMI

U.S markets – posted a rebound last night. The Dow Jones closed 72.50 higher, the S&P500 added 1.38 and the NASDAQ closed 9 pts higher. FOMC; The Fed left rates unchanged, but said it expects inflation to move “up this year and to stabilize” around its 2 percent target. Treasury yields rose on the back of the statement. The benchmark 10-year yield rose to 2.75 percent, before trading at 2.72 percent, while the two-year yield held around 2.15 percent. “The statement is pretty consistent with what we’ve seen in the underlying data,” said Erik Schiller, senior portfolio manager at PGIM Fixed Income. “It was a slightly hawkish statement, in our view.” The ADP Non-Farm Employment Change came in much better than expected at 234K. PayPal shares dropped 10 percent in after-hours trading. eBay will start working with global payment company Adyen to process its sales. Customers will have the option of using Adyen on its site or going off-site to pay via PayPal. Oil bounced back on Wednesday closing 67 cents higher at $64.63, rising US stockpiles failed to dent buyer confidence. U.S. crude inventories rose by 6.8 million barrels in the week through Jan. 26. American oil production topped 10 million barrels a day in November, roughly matching the all-time high set in November 1970. European markets – traded mixed on Wednesday, the FTSE fell by 54.43. The DAX closed 8.23 pts lower and the CAC finished 8.15 pts higher. Europe’s media stocks were the biggest gainers Wednesday afternoon, with the sector up over 0.6 percent amid news of several rating updates. Morgan Stanley announced it had upgraded its stock recommendation for Telenet to “equal weight” from “underweight” on Wednesday. The Belgian media firm gained throughout the day and was up nearly 3 percent at the end of trade. Healthcare was the poorest performing sector, down 1.17 percent, but retail was also significantly in the red, 0.67 percent lower. Swedish clothing retailer H&M was the biggest laggard, with the stock down 10.6 percent as the company’s latest earnings report was accompanied by news that it had struggled to adapt to online retail. Euro Zone CPI Flash Estimate came in at 1.3% meeting expectations.

Forex – Basically a mixed session for the USD last night, FOMC statement looking at higher inflation targets and rates holding as expected didn’t really boost or badly hurt the USD. It made gains to the AUD and JPY but lost ground to the EUR, GBP and CAD. Canadian GDP meet expectations coming in at 0.4%. The USDCAD made new Jan low’s in last night London session hitting 1.2249. Buyers parred losses into the NY session but failed to break out of the red. The JPY took a back seat last night dropping to the majors. The EURJPY and GBPJPY had strong sessions. The GBP was up by 151 pips to the JPY at one stage. The GBP showed strength last night, the EURGBP held a 50 gain that was reversed to a 20 loss due to a charging sterling. The USDJPY closed 41 pips higher setting a minor higher low. We’d like to see 108.58 act as support for any new tests. Gold held its gains snapping a two-day losing streak to close 6.80 higher. Buying has continued this morning, a trend continuation looks to be developing. Bitcoin has held 10,000 again this morning. This level has been peppered with seller tests this week. While 10,000 – 9635 can continue to ward off sellers we may see support develop. We’d like to see today close as a higher candle to show further confirmation.

GBPJPY – made a good example of a continuation set up this week. The trigger bar was on the 30th, we had a failed breakout that tested a previous high and closed higher in the direction of the trend. Yesterday sellers retested and where rejected showing plenty of buyer demand.

Good trading from Eightcap.

Sources; CNBC. All times are AEDST

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