News & Analysis

Dow Touches 23,000; Positive US Earnings; Brexit Worry Continues

Oct 17, 2017 | Daily Market Outlook

Key data and releases coming up:

  19:10 AEDT – EUR ECB President Draghi Speaks
  19:30 AEDT – GBP Average Earnings Index
  23:30 AEDT – USD Building Permits
  01:30 AEDT (THURS) – USD Crude Oil Inventories

The Dow Jones rallied for a third straight day with price hitting 23,000 overnight but closed just below 22997.44, adding 40.48 points. Price first crossed 22,000 on the 2nd of August, 2017 – 1000 points in just 76 days. Positive US earnings seem to be the main drivers – JP Morgan and United Health both reported better than expected figures. US Dollars also up on talk that Trump might pick policy hawk John Taylor for Fed chair. Palladium, on the other hand, fell from 16-year high hit on Monday. Gold didn’t fare any better either, falling to a 1 week low and price settled $14.40 lower.

Europe were mainly low – DAX -8.64; FTSE -10.80. UK CPI data came in as expected at 3.0%, taking inflation to a 5½ year high in September (one would wonder if this will force the Bank of England’s hand for a rate rise?). Some analysts have commented that a rate rise now could hurt an already fragile UK economy. Carney commented that Britain’s financial industry is running out of time for ministers to strike a transitional deal with Brussels over leaving the European Union. Brexit, combined with 3% inflation, gave GBP traders little confidence. The GBPUSD finished 60 pips lower at 1.3189. The EUR continued lower on Tuesday, loses to the USD, NZD, AUD and JPY.

Oil held small gains but failed to continue and price closed at $52.13, holding around September’s highs. The Nikkei closed higher for 11-days straight. Kobe Steel which continues to unravel failed to dent the rallies as it emerges they have been fabricating data for decades. The ASXS&P200 closed at 5888 yesterday continuing its surge, just missing 5900 in yesterday’s trade.

EURJPY – currently holding just above 131.95 support. This level has been holding for buyers since September and sellers continue to test as buyers have struggled to get a move going from this area. A break could set up a deeper move lower. Sellers have their work cut out as support runs from 131.95 – 131.70 level.

GBPUSD – broke lower overnight running down to 1.3154.

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