News & Analysis

Equity Markets – U.S. indexes decline – FTSE touches new records; JPY surge hammers majors – GBPJPY drops over 200 pips; Gold break-out fails to hold.

Jan 11, 2018 | Daily Market Outlook

Today’s high impact news:

▸00:30 USD PPI m/m

U.S markets – traded lower overnight the S&P500 and NASDAQ had their first weaker session for 2018. The Dow Jones closed 16.67 points lower. The S&P500 lost 3.06 points and the NASDAQ closed 10.01 points lower. Investors fretted over the possibility of China halting its Treasury bond purchases and the U.S. pulling out of NAFTA. Bloomberg News reported Wednesday, citing people familiar with the matter, that officials in Beijing have recommended the Chinese government lowers — or even stops — it’s buying of U.S. sovereign debt. The report also notes that Chinese officials think U.S. debt is becoming less attractive compared to other assets, adding that trade tensions between the two countries could provide a reason to slow down or halt the purchases. Reuters reported that Canada is increasingly convinced that Trump will pull the U.S. out of the trade agreement. European markets – closed mixed on Wednesday, the FTSE closed 17.49 points higher touching new records during the session. The DAX closed 104.25 points lower and the CAC settled 19.26 points in the red. Banking stocks had rallied 2 percent by the close Wednesday following several rating upgrades in the banking sector. Telecoms was the worst-performing sector, dropping throughout the day’s trade to finish 1.89 percent lower.

Forex – the JPY was last night’s big mover trashing the majors and basically anything that crossed it. The NZD on of the few that stood its ground. The USD and GBP were hammered, the USDJPY was down as much 1% during last night’s trade. The GBPJPY settled over 200 pips lower. The USD fell on news China was ready to slow or halt its U.S. Treasury purchases. “If the reports turn out to be true and China no longer sees Treasuries as an attractive option, the repercussions could be significant as the country is one of the biggest holders of U.S. debt,” Craig Erlam, a senior market analyst at OANDA in London, said in a note. It’s not that common to see the JPY and USD moving in opposite directions as both pairs can be seen as safe havens. The USD did recover into the NY session, the EURUSD and AUDUSD which jumped on the USD post-China news trimmed gains finishing off session highs. The GBPUSD after a strong fightback ended the session lower by 32 pips. 1.3500 is a support point for buyer’s, break of this level could put pressure on the med-term uptrend. The EUR snapped its losing streak to the USD but still remains under pressure. We’re watching 1.1960 level as it may become resistance. Gold surged to the USD last night hitting 1327. Buyers failed to hold gains price settled 5 dollars higher. 1326 continues to act as resistance.

Gold – 4H chart show’s an ascending triangle forming. It’s very rough atm and need’s further time to develop. Strong resistance has set up from 1322.40 – 1326.

Good trading from Eightcap.

Sources; CNBC – Oanda – Reuters.  All times are AEDST


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