News & Analysis

US trades mixed, Europe has a shocker – FTSE drops 88; USD drops to 3-month lows – EURUSD GBPUSD new 2018 Highs; Gold surges by $16 – Oil above $65.00

Jan 25, 2018 | Daily Market Outlook

Today’s high impact news:

Ôû©23:45 EUR Minimum Bid Rate
Ôû©00:30 CAD Core Retail Sales
Ôû©00:30 EUR ECB Press Conference

U.S markets – traded mixed overnight the Dow Jones traded in a volatile session closing 41.31 points higher. Tech stocks dragged the NASDAQ lower by 45.23, protectionism policy fears weakened sentiment, the S&P500 closed slightly lower losing 1.59 pts. Worries about further U.S. protectionist policies also gave investors jitters. Earlier on Wednesday, Commerce Secretary Wilbur Ross suggested the U.S. was ready to enter a trade war. “In general, it’s starting to feel like you have four things. You have tariffs placed on solar panels and washing machines. You have the Treasury Secretary touting a weaker dollar,” said Art Hogan, chief market strategist at B. Riley FBR. “You have Wilbur Ross talking about how trade wars are normal and the U.S. is willing to fight them, and you have NAFTA negotiations going on in real time,” Hogan said. “That’s enough for the markets to pause.” Tech stocks were led lower by Apple, which fell 1.6 percent after Bernstein analyst Toni Sacconaghi predicted iPhone sales growth could be weak this spring. Shares of Facebook, Amazon and Alphabet also traded lower. Of the S&P 500 companies that had reported as of Tuesday morning, 77 percent have beaten earnings estimates, while 80 percent have topped revenue expectations, according to FactSet. Oil jumped after inventories showed a 1.1M drop in inventories, price added 140 cents and got close to hitting $66 a barrel, closing at $65.77. Buyers have been active this morning, oil is trading above $66 barrel. Price is trading at levels not seen since 2014. European markets – traded sharply lower on Wednesday, the FTSE fell by 88 points. The DAX lost 144.86 and the CAC fell by 40.10. Utilities were one of the worst performing sectors, with France’s Suez sinking over 16 percent to the bottom of the STOXX 600. The utilities group tanked after it lowered its 2017 goals, stating that it expected earnings before interest and tax (EBIT) to drop 2 percent, to 1.28 billion euros ($1.58 billion) in 2017. The World Economic Forum’s Annual Conference in Davos, Switzerland, continues, with French president Emmanuel Macron to speak this afternoon.

Forex – what a night Wednesday produced! The USD started sinking in the London session and didn’t stop thought to New York. Adding fuel to seller fire, Treasury Secretary Steven Mnuchin said the weaker dollar was positive for American trade. He was speaking at the World Economic Forum in Davos on the eve of Trump’s arrival at the Swiss resort. This set a straight road for bears, as the Dollar took a hammering! The USDJPY lost 109 pips breaking below 110. The USDCAD lost 75 pips, breaking 1.2335 during the session. The USDCHF lost 127 pips to close in September 17 levels. The EURUSD jumped by 110 pips closing above 1.2400. The GBPUSD soared by 240 pips closing above 1.4200. Levels not seen 2016. Gold followed surging to a helpless USD adding $16 and at one stage trading at 1360. Price settled at 1358.38.

GBPUSD – flew back to 2016 pre-Brexit lows last night, shaking off High UK unemployment data. Price closed above 1.4200 for the first time since 2016. Nothing moves in a straight line in the markets, could this be a blow off bar? We’ve seen a 732 pip gain on the cable since the start of 2018!

Good trading from Eightcap.

Sources; CNBC. All times are AEDST

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