Forex news for near trading on January 27, 2020
- Dow and S&P have the worst day since October
- US raises China travel advisory
- Crude oil futures settles at $53.14
- John Bolton: There was absolutely no coordination with the New York Times
- Barnier: No possibility of frictionless trade between EU and UK
- Venezuela weighs privatizing oil industry
- US sells 5-year notes at 1.448% vs 1.437% WI
- ECB's Mersch: Asset prices are currently at very elevated levels
- CDC says no new US cases of coronavirus today. Tally stands at 5
- European shares end sharply lower on the day on global growth concerns
- US sells 2-year notes at 1.440% vs 1.439% WI
- China's Zhejiang province says companies not allowed to return to work before Feb 9
- US impeachment trial: Bolton's report strengthens the case for witness to be called
- Singapore has confirmed 5th case of coronavirus
- Dallas Fed manufacturing index for January -0.2 versus -1.6 estimate
- US new home sales for the month of December 694K vs 730K
- OPEC president Arkab: sees little impact from coronavirus on global oil market
- The JPY is the strongest and the AUD and NZD are the weakest as the North American session begins
- German government reportedly sees 2020 GDP growth at 1.1%
Today the focus was on risk aversion as the coronavirus saw the number of deaths rise to over 80 and concerns about its dormant stage (up to 2 weeks) could mean that things get much worse before they get better. The United States this afternoon raise the travel advisories to China. The number of cases in the US is up to 5 which is not a lot, but as is often the case, the potential and fear is hard to control.
As a result, the of Pavlovian reactions dominated the markets today.
- Spot gold is trading up $11 or 0.7% at $1582.62 as traders invest in the relative safety of the precious metal
- WTI crude oil futures are trading down $1.43 or -2.64% at $52.77 as fears for a global slowdown and lower oil demand send prices lower
In the US stock market, major indices were marked lower on global growth fears. This week is also vulnerable given a slew of earnings releases including Apple, Microsoft, Alphabet, Tesla, Starbucks, Caterpillar, Exxon Mobil, McDonald's, Boeing, Facebook. The Dow and S&P had their worst day since October. For the NASDAQ index, it had its worst day since August. The final numbers in the US are showing:
- S&P index -1.57%
- NASDAQ index, -1.89%
- Dow industrial average -1.57%
European shares also fell sharply, with the German Dax falling by -2.74% and the France's CAC down by -2.68% leading the way. Below are a summary of the % high/low ranges for the major indices in Europe and the US, as well as the percentage closing levels. The European shares close near low levels. The US shares are ending the day in the bottom half of the trading range.
In the US and European debt markets yields moved sharply lower. In the US 10 year yields fell by -8.6 basis points. The yield curve spread narrowed by 3 basis points to 15.89 to 18.92 basis points.
European yields are also sharply lower. Italy got an extra boost after the regional elections thwarted a far right power play over the weekend. Italian 10 year yields points by 19.5 basis points.
In the forex market, the safe haven flows moved into the JPY, CHF and USD and out of the AUD, NZD and CAD.
Technically,
- The AUD was the weakest currency. The AUDUSD fell over 1% on the day. That fall took the price to the end of November low price at 0.67525 where the buyers put a toe in the water. The pair is just off that level at 0.67592. So the rebound is not exactly racing higher. However if the price can get above a broken downward sloping trendline on the 4 hour chart 0.6782 (and moving lower - see post here), there could be more upside potential. For now though the downside is more vulnerable
- The EURUSD scraped along a lower trendline on the 4 hour chart. The current line cuts across at 1.1008. A move below that level would solicit more selling with the swing low from the end of November at 1.09806 a potential target down the road. On the topside, the 1.10392 level was a swing low at the beginning of December. The high price today stalled just ahead of that level at 1.1037.
- The Bank of England will meet later this week with the expectation up to close to 60% for a rate cut (was at around 50% at the end of last week). The price action spent most of the New York session below its 200 hour moving average at 1.30622 (currently) and the 50% retracement of the move up from the January 20 low at 1.30645. That area will be odd as a barometer for trading in the new day. Move above and we should see more upside potential. Stay below that ceiling, and/or move below the 61.8% retracement of the move up from the same January 20 low at 1.3040 would be more bearish.
- The USDCAD moved higher helped by lower oil prices today and in the process has moved above its 100 day moving average at 1.31776. We currently trade at 1.31916. Stay above in the new trading day, and we should see more upside probing.
