News & Analysis

US stocks retreat shut down fears return; USD weakens – AUDUSD hit 80 cents; Gold gives up gains holds low; Oil inventories miss sends price back to weekly lows.

Jan 19, 2018 | Daily Market Outlook

Today’s high impact news:

Ôû© 20:30 GBP Retail Sales m/m

U.S markets – fell on Thursday as Government shut down re-emerged. The Dow Jones closed 97.84 lower the S&P 500 dropped 4.53 and the NASDAQ closed slightly lower by 2.23 points. Congress needs to pass a spending bill by the end of Friday to avoid a government shutdown. Historically, a government shutdown has led to a short-term pullback in the stock market. “This is definitely related to the shutdown,” said Larry McDonald, head of the U.S. macro strategies at ACG Analytics and creator of The Bear Traps Report. “The chances of a shutdown have increased in the past few weeks, but the market’s been ignoring it.” U.S indexes pulled back from strong record gains made on Wednesday night. Congress needs to pass a spending bill by the end of Friday to avoid a government shutdown.

Oil fell on Thursday losing 35 cents. EIA inventories report, inventories fell 6.9 million barrels last week, compared with forecasts for a 3.5 million-barrel draw, the U.S. Energy Information Administration said. Crude supplies at the Cushing, Oklahoma delivery hub for U.S. crude futures fell 4.2 million barrels in the week, the largest draw since at least 2004.

European markets – traded mixed on Thursday, the FTSE lost 24.47 points, and the DAX closed 97.47 higher in a strong session. The CAC closed slightly higher adding 0.84 points. Technology stocks were among the gainers Thursday, up 1.4 percent amid corporate earnings news. Rightmove slumped towards the bottom of the index as J.P. Morgan downgraded its stock recommendation to “underweight” from “normal.” Shares of Britain’s biggest property website were down 3.7 percent. The GER30 broke above 13255 resistance in last night’s session.

Forex – Government shut down fears affected the USD, traders piled into the euro, yen, sterling and other major currencies amid concerns over a possible U.S. government shutdown as lawmakers struggled to cobble together a federal budget deal. The AUDUSD has hit 80 US cent this morning. After touching it earlier in the week. The EURUSD recovered 50 pips and the GBPUSD jumped by 68 pips. The USDCAD broke 1.2432 after rallying by 54 pips. The Japanese Yen lost ground to most majors but rallied to the USD. The GBPJPY hit 154.30 fresh highs in levels not seen since 2016. Gold had a funny session, after a fight back it failed to hold gains despite uncertainty and a weaker USD, closing on its open price 1326.50. Price is trading $1.40 higher this morning.

EURUSD – recovered yesterday but still remained under two highs. With ECB fears about the currency’s strength are we seeing a technical counter-rally at the moment?

Good trading from Eightcap.

Sources; CNBC. All times are AEDST

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