By Deepta Bolaky
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:
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.
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
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
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
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)
|Friday, 31st January 2020
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