Overnight on Wall Street: Thursday 30/01/2020

The upbeat earnings reports initially lifted risk sentiment in the European and US session. However, major US equity indices ended the day mixed as the Fed’s comments toned down the momentum:

• Dow Jones Average Industrial added 12 points to finish at 28,735.
• S&P500 relatively flat at 3,273.
• Nasdaq Composite added 6 points to close at 9,275.

On the earnings front, Microsoft and Tesla exceeded estimates while Facebook’s stock dropped by 7.5% in after-market trading hours as its growth slows.

Currency Markets

In the FX market, the main focus was on the FOMC decision. As widely expected, the Fed kept the interest unchanged within the target rate of 1.5%-1.75%. The Fed highlights a strong job market, but also note that the uncertainties persist.

“The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.”

US Dollar Index

The US dollar remains a strong performer. Its index tracking the performance of the greenback against a basket of currencies climbed higher to 97.86.

US Dollar Index (Daily Chart)

Source: GO MT4

AUDUSD

The Antipodeans were among the worst performers. The Aussie dollar struggled to rise despite the upbeat inflation data. The recent CPI figures eased expectations of a rate cut in February, but the coronavirus-led risk aversion and the Fed status quo statement prevent the AUDUSD pair to recover to the upside.

As of writing, the Aussie dollar was trading at 67.50 US cents.

AUDUSD (Hourly Chart)

Source: GO MT4

Commodities

The rebound in crude oil prices was overshadowed by the EIA report and the Fed’s statement. US crude oil inventories rose by 3.5 million barrels last week against and expectations of only 0.5 million barrels. The speculations that OPEC is considering deeper oil cuts or the extension of production cuts are currently providing a floor to oil prices.

USOUSD and UKOUSD (Daily Chart)

Source: GO MT4

The Fed, the spread of the coronavirus and its potential impact on the pace of the global recovery are fuelling the demand for Gold. As of writing, the XAUUSD pair was trading higher at $1,576.

XAUUSD (Hourly Chart)

Source: GO MT5

Key Upcoming Events

KOF Leading Indicator (Switzerland)
Unemployment Rate, Harmonized Index of Consumer Prices and  German Buba President Weidmann Speech (Germany)
Business Climate, and Unemployment Rate (Eurozone)
Bank of England Quarterly Inflation Report, Interest Rate Decision, Monetary Policy Summary, BoE minutes, Governor Carney Speech, and BoE Asset Purchase Facility (UK)
Core PCE, Gross Domestic Product, and Jobless Claims (US)
ANZ – Roy Morgan Consumer Confidence (New Zealand)

Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.  Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.