Forex news for news for NY trading on January 30, 2020.
- AMZN is AMZG
- US major indices close at session highs. Reverse near 1% declines
- BOC's Beaudry: Financial vulnerabilities can make it tough to meet inflation target
- At times of crisis and uncertainty, people surrender judgement to authorities
- World Health Organization: Declares coronvirus a public health emergency
- Crude oil futures settle at $52.14
- CDC: It is not possible to detect the coronavirus before symptoms emerge
- CDC announces the first person-to-person spread of the coronavirus in the US
- European major indices end the day with steep declines
- Kudlow: No material impact seen on US due to coronavirus
- OPEC+ may move up its meeting to early February - report
- US initial jobless claims 216K versus 215K estimate
- US Q4 advance GDP +2.1% vs +2.0% expected
- Coronavirus cases in China's Hubei province near 5000
- The GBP is the strongest and the AUD is the weakest as NA traders enter for the day
- BOE's Carney: Forward guidance is a key tool that central banks have
- BOE leaves bank rate unchanged at 0.75%; votes 7-2
a look at other markets as New York traders look for the exits:
- Spot gold $-3.74 or -0.24% at $1573.08
- WTI crude oil futures down $0.41 or 0.77% at $52.93
The Bank of England started the early New York session by keeping rates unchanged. It was governor Carney's last meeting and he also spoke more constructively about the UK economy than the market expected. The price of the GBP moved higher before the announcement and continued that trend immediately after the decision. The GBPUSD rose to a high price of 1.3109 on 2 separate hourly bars 5 or so hours apart. However, the inability to extend higher (double top) led to a rotation back toward the 1.3079 level. That level happens to correspond with the 38.2% retracement of the move down from the December 31 high to the January 14 low.
Overall, the more hawkish BOE helped to establish the GBP as the strongest of the major currencies today. Admittedly, however, most of the gains were made prior to the New York open (the NY session traded down and up during the session).
While the GBP was the strongest of the majors today, the weakest currency today was the NZD and the AUD as it continue to suffer on the back of concerns from the coronavirus ands its potential impact on their economies.
The coronavirus was once again in the news today with 170 reported deaths and over 8000 infected. A CDC headline around midday outlined the 1st person-to-person spread of the coronavirus in the US. That helped to send stocks and yields lower, USDJPY lowe, and gold higher. However, as has been the Pavlovian reaction, the price declines could only go so far before stocks rebounded, rates moved little higher, the USDJPY fall stalled and gold moved back down.
Later in the day, even the World Health Organization(WHO) declaring the coronavirus a public health emergency could only lead to a brief "risk off" move in markets.
Perhaps it was the WHO's attempt to announce the emergency without creating a panic, that comforted the markets. Most of the press conference was spent gushing about China's response to the outbreak. They also said their main concern was not in China's efforts to stop the spread of the virus, but the efforts in other countries who didn't have organized health systems in place (read less-developed countries).
As a result, the comforting words led to a risk off trade reversal with:
- Stocks closing higher on the day
- Bond yields moving back positive on the day
- Gold moving negative on the day, and the
- USDJPY moving back to the New York session high at 109.00 after falling below its 100 day moving average at 108.706 and moving to a New York session low of 108.57.
What we know is that the markets is - and will continue to be -influenced by the coronavirus. The coronavirus is the new Iran, which in turn was the new Brexit. What will be the next headline story theme?
Also of note today is that the earnings season continues to cause its own volatility within the markets (including stocks, interest rate, gold, oil and forex).
At this time yesterday, the market was selling off Facebook shares and buying Microsoft shares after their respective earnings.
Today Microsoft ended up 2.79%, but Facebook shares tumbled by over -6% at the close.
However, in the minutes after the close today the "new big-name earning report" for the day Amazon announced earnings. Those earnings did not disappoint. In fact, EPS was 60% higher than expectations for the quarter with higher revenues too. As a result Amazon shares are currently trading up up 11.81% in after-hours trading. AMZN is AMZG (that is Amazon is Amazing).
What does that have to do with forex?
As earnings fluctuate it has helped push currencies like the AUD, NZD and JPY move up and down depending on "risk on" or "risk off flows". The problem with markets that are overly reliant on random headline news (like coronavirus), and earnings reports, it is hard to predict what the next headline might bring.
PS at the start of the New York session US GDP did come in a little better at 2.1% versus 2.0% estimate. However, consumption was weaker than expected which is a bit of worry. On the positive side inventories subtracted from the report (that may be reversed in the next quarter), also net trade was a positive contributor.
In the next quarter if consumption can rebound, inventories can rebuild, net trade can continue to improve, and business investment picked up, maybe, there will be the growth that the Trump administration is looking for. For now, however, 2.1% is just not that great.
