News & Analysis

FOMC shakes up US equities; USDCAD jumps – AUDUSD drops back to .7800; Gold continues decline after short fightback.

Feb 22, 2018 | Daily Market Outlook

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▸20:30 GBP Second Estimate GDP
▸23:30 EUR ECB Monetary Policy Meeting Accounts
▸00:30 CAD Core Retail Sales

US markets – continued lower on Wednesday in a choppy session. The Dow Jones rallied up to the FOMC minutes. The minutes showed the Fed sees increased economic growth and an uptick in inflation as justification to continue to raise interest rates gradually. The central bank said it believes inflation can reach its 2 percent target but does not think inflation is getting out of hand. The minutes sent the 10-year yield higher. The benchmark 10-year yield hit a four-year high after the Fed released the minutes from its January meeting. This put pressure on stocks sending them lower to close lower for a fourth day in a row. The Dow lost 166.97 points, the S&P500 closed 14.93 lower and the NASDAQ fell by 16.08 points.

Oil – lost further ground overnight settling 30 cents lower after trading 73 cents lower during the day. Buyers trimmed some losses late in the session. OPEC, Russia and other producers will discuss extending their existing cooperation for many more years when they meet in June, the UAE’s energy minister said. The EIA inventories report is expected to show a rise in US crude stockpiles at the end of the week. Traders keep an eye on $60.90 as it’s starting to set up as a short-term low.

European markets – closed mixed on Wednesday, earnings and higher open on Wall St continuing to support trader sentiment. Lloyds Bank reported its highest pre-tax profit in more than 10 years and announced a share buyback of up to £1 billion ($1.40 billion). The stock ended trading 2.7 percent to the upside. Basic resources rallied to close 1.6 percent higher, making it the best performing sector. Miner Glencore topped the European benchmark after its 2017 full-year results were the best ever on record with an overall adjusted profit of $14.76 billion, Reuters reported. The stock closed 5.2 percent higher. Indices finished mainly higher, the FTSE added 34.80 pts, the DAX lost 17.41 and the CAC closed 12.31 higher. UK Average Earnings Index increased to 2.5% meeting market expectations.

Forex – saw a continued charge from the USD as it returned to the 1.27 handle to the CAD. Risk majors all finished lower. The AUDUSD taking it very hard falling back to .7800. The GBP didn’t get much support from the inflation report, as it fell to the USD and JPY. The EURUSD continued lower for a 2nd day losing 51 pips. The Japanese yen made a comeback of sorts, hitting risk majors but failing to move the USD. The AUDJPY was hit hardest losing 51 pips. The USDJPY continued its run adding 45 pips, taking its weekly tally to 149 pips.

Gold has started the morning higher, after closing lower for a 4th straight day yesterday. Price closing $4.30 lower after making a $7.20 rally. Traders, keep an eye on 1322.60 this level is a previous high and it rejected sellers at the end of yesterday session. If sellers maintain momentum and break this point we may see a lower move to test 1317.50 – 1314.

USDJPY – daily chart  showing price has hit and retraced at a previous high. Are we going to see this point confirm as resistance?

Good trading from Eightcap.

Sources; CNBC.  All times are AEDST

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