News & Analysis

Dow drops to 3 week lows; EUR pulls back; USDJPY – AUDUSD new fortnightly lows.

Nov 16, 2017 | Daily Market Outlook

Today’s high impact news:

20:30 GBP Retail Sales
00:30 USD Unemployment Claims
NRT BOE Gov Carney Speaks

The red continued for global exchanges overnight. In the US stocks traded lower as the Dow Jones lost 138.19 points to fall to three-week lows. The S&P500 lost 14.25 and the NASDAQ finished 31.66 points lower. Caterpillar contributed the most to the losses on the Dow, the 30-stock index briefly fell 166 points, but a 2 percent rebound in GE shares helped it cut losses. The S&P 500 was also pressured by declines in financials and consumer discretionary stocks. Consumer discretionary stocks fell 0.4 percent, led lower by Target. The retailer’s stock dropped nearly 10 percent as its holiday forecast disappointed investors.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, hit 14.34, its highest level since Aug. 29 on Wednesday. But the index gave back some of its gains to trade at 13.29. A revised version of the Senate’s tax plan includes a measure that effectively repeals a law requiring most Americans to buy health insurance or pay a tax penalty. The House is also set to vote on its own tax bill on Thursday. “If the [House] bill gets voted down, that could accelerate this pullback,” said John Serrapere, director of research at Arrow Funds. “The last four days have been mostly down days for the different S&P sectors.”

In Europe it was more of the same for stocks, the FTSE closed 41.81 points lower the DAX lost 57.11. Basic resources were one of Europe’s biggest sectoral losers, as lower-than-expected retail sales and industrial production figures seen Tuesday and a decline in metal prices seen Wednesday impacted trade. Copper producer Aurubis fell 4 percent. Oil and gas meanwhile sank 1.49 percent due to weaker oil prices. While Brent and WTI crude came off session lows, prices were still in negative territory by the European market close.

Forex, the USD pared earlier losses as U.S. consumer prices edged up and retail sales increased. Sellers wherein complete control during the London session with the EURUSD making further gains. The USDJPY made new three week lows as it traded down by 70 plus pips. The USDCAD made new weekly highs in the NY session as the CAD dropped due to a weaker oil price outlook. The EURUSD gave up gains in the NY session to finish the session lower. The AUD continues to struggle with new weekly lows set to the USD and JPY. The AUDJPY settled 92 pips lower at 85.64 testing August lows. The GBP had a mixed night despite better than expected CPI data, it finished flat to the USD and lower to the JPY.

Gold looked set to have a positive session, buyers hit new weekly highs at 1289.47. This all came unstuck once the USD reversed, sellers quickly took control knocking price lower to settle $2.46 weaker at  $1277.77. Oil was little changed yesterday after it’s 2% fall. Signs of a demand slowdown and rising U.S. output offset hopes for an extension of OPEC production cuts. US crude inventories showed an increase to 1.9M barrels.

US30 – Has broken its medium-term uptrend. The current level of 23,260 is a previous low that has started to show buyer support. Will we see it reconfirm for buyers?

Good trading from Eightcap.

Sources; Reuters, CNBC

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