Overnight on Wall Street: Wednesday 22/01/2020

The US equity benchmarks closed in the red on Tuesday. Tourism and travel-related stocks took a beating as the US Centers for Disease Control and Prevention announced the first case of the coronavirus disease which has killed six persons in China so far.

Major US equity indices retracted from record highs as the virus spread ahead of a busy holiday period in China for the Chinese Lunar New Year. Even though the virus has not reached alarming levels, investors are paying particular to the outbreak:

• Dow Jones Average Industrial lost 152 points to finish at 29,196.
• S&P500 was slightly lower at 3,321.
• Nasdaq Composite erased 18 points to close at 9,371.
• Boeing fell by more than 3% on the news that 737 Max will stay grounded until mid-2020.
• Tesla shares rose about 7% on a broker’s update.

Currency Markets

In the FX market, the Japanese Yen find buyers in a risk aversion environment due to rapid spread of the virus across borders. On the economic front, ZEW surveys in Germany and across the broader Eurozone area showed that the economic sentiment has improved.

EURUSD

The EURUSD pair seesawed between gains and losses but closed the day unchanged around the 1.10 level after reaching a high above the 1.11 level.

EURUSD (Hourly Chart)

Source: GO MT4

GBPUSD

The upbeat UK jobs data lifted the Sterling pairs. GBPUSD rose above the 1.30 level as the claimant count change and average earnings came better-than-expected at 14.9k and 3.2%. However, the employment data was modest and traders are expected to keep monitor economic releases to evaluate the prospects of a rate cut.

GBPUSD (Hourly Chart)

Source: GO MT4

Commodities

Due to the public holiday on Monday, traders were deprived of the usual oil report on Tuesday. The price action of oil prices was primarily driven by the situation in the Middle East.

The oil market is balancing the fears of supply disruptions driven by tensions in the Middle East and the future of crude oil demand.  As of writing, WTI and Brent Crude are trading in the vicinity of $58 and $63 respectively.

USOUSD and UKOUSD (Daily Chart)

Source: GO MT4

Gold has remained in elevated levels despite a stronger US dollar. The XAUSUD pair seesawed throughout the trading day to settle in a familiar range around the $1,560 level.

XAUUSD (Hourly Chart)

Source: GO MT4

Key upcoming events

World Economic Forum – Davos 
Westpac Consumer Confidence (Australia)
Public Sector Net Borrowing (UK)
BoC Consumer Price Index, Rate Statement, Monetary Policy Report, Interest Rate Decision and Press Conference (Canada)
Chicago Fed National Activity Index, Housing Price Index, and Existing Home Sales (US)

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