EUR/JPY has restarted its drawback on Thursday and is aiming for a possible visit to the 55-day SMA just over 121.00. There are no supports of importance until the main 200-day SMA, today at 120.84, in the event sellers recover control. The adverse view underneath this area should be restored in the cross.
The S&P ended in the red as selling hit Wall Street following news that the deadly coronavirus had reached the U.S.
The S&P 500 lost 0.27%, while the Nasdaq Composite fell 0.19% and the Dow Jones Industrial Average lost 0.52%.
The U.S. Centers for Disease Control and Prevention announced the first case of the coronavirus in the United States.
The news was met with a wave of selling in airline and casino stocks on fears that a widespread outbreak could disrupt international tourism and dent economic growth.
American Airlines, United Airlines fell more than 4%, while Delta Air Lines fell nearly 3%.
In industrials, meanwhile, Boeing slumped 3.3% after the aircraft maker pushed back its timetable for regulators to approve the return of the 737 MAX to the middle of the year. That added about 73 points to the Dow's losses.
A rise in real estate, however, led by Crown Castle, Macerich and American Tower, helped stem broader-market losses.
In tech, FANG stocks ended mostly in the red, led by Apple, offsetting gains in chipmakers Intel and Micron.
Jefferies upgraded its rating on Intel to hold from underperform, sending Intel 1.6% higher.
World stock markets looked to be getting back to full strength on Wednesday, as updates from China about the spread of a new flu-like coronavirus raised hopes the outbreak would be contained.
Worries about contagion, particularly as millions travel for upcoming Lunar New Year festivities, have knocked the world's top equity markets off record peaks.
The outbreak has revived memories of the Severe Acute Respiratory Syndrome epidemic in 2002-03, a coronavirus outbreak that killed nearly 800 people.
This time, China's response and candour -- in contrast to the SARS epidemic -- have helped reassure investors concerned about the possible global fallout.
China's National Health Commission said on Wednesday there were 440 cases of the new virus, with nine deaths so far. Measures are now in place to minimize public gatherings in the most-affected regions.
Stocks in London, Frankfurt and Paris scored early gains of 0.1% to 0.2%. S&P 500 futures were up 0.5% before the Wall Street open.
Shanghai stocks recovered from an early 1.4% drop to end higher. Japan's Nikkei, South Korea's Kospi index and Hong Kong's Hang Seng had all risen by more than half a percentage point overnight. Australia's S&P/ASX 200 shrugged off worries to hit a record high.
Stocks in focus in premarket trade on Wednesday, 22nd January.
9 AM ET: Tesla stock rose 4.8%, taking the company’s valuation above $100 billion for the first time as the squeezing of short-sellers gets ever tighter.
If it stays above that level, CEO and founder Elon Musk will be eligible for up to $346 million in stock awards, although one imagines the satisfaction of thwarting the doomsters who have been his chief bugbear for the last four or five years will count for more for him.
Wedbush became the latest house to raise its price target on Wednesday, hoisting it to $550 from $370. That's the latest in a series of analyst upgrades that have followed the commissioning of Tesla's new plant in China, the world's largest market for electric vehicles.
8:50 AM ET: Apple stock was up 0.7% after a Bloomberg report saying that the company was preparing to start manufacturing its new cut-price iPhone in February. The company has said it expects an upsurge in demand for phones this year as companies roll out 5G services.
8:43 AM ET: Capital One stock was up 2.4% and closing in a new 12-month high after the lender beat consensus forecasts for earnings and revenue after the bell on Tuesday.
Boeing Co's bill for the 737 MAX grounding could balloon to more than $25 billion, analysts estimated on Wednesday, a day after the U.S. planemaker warned of further delay in returning its once best-selling jet to service.
The company has already booked $9 billion in costs related to the grounding, including $5.6 billion as compensation for airline customers and $3.6 billion in charges to cover additional production costs.
Jefferies analyst Sheila Kahyaoglu said Boeing may now need to boost its compensation package for customers by another $10 billion and revise its cost estimate related to the 737 MAX's production by an additional $5.4 billion.
"Our estimates assume 737 MAX deliveries restart in Q3 2020," Kahyaoglu said, lowering the brokerage's price target on the stock to $390 from $420.
Boeing said on Tuesday it did not expect to win approval for the return of the 737 MAX to service until mid-year due to further potential developments in the certification process and regulatory scrutiny on its flight control system.
"We are expecting Boeing's up-coming results to be 'an absolute disaster', and that now looks guaranteed," Stallard said.
Bankers are "bombarding" Guyana with offers of financing backed by future oil production, the finance minister told Reuters, but the South American nation is rejecting the proposals to avoid the excessive borrowing that has plagued other oil producers.
As the former British colony begins its first significant oil production this year, it is wary of avoiding the mistakes made in oil-dependent economies such as Angola, Nigeria and its economically collapsing neighbor Venezuela.
Winston Jordan, an economist and career public servant, also cited Guyana's own history of economic crisis in the 1980s for turning down overtures to finance infrastructure and development before oil money started flowing.
"At the IMF meetings, I was bombarded, at the IDB meetings, I'm bombarded with people telling you how much money they can lend you," he said in an interview on Wednesday in his Georgetown office, referring to the International Monetary Fund and Inter-American Development Bank.
He declined to name the specific institutions, saying only that "quite a few banks, quite a few middlemen" offered loans of between $500 million and $2 billion.
During the oil boom years, Venezuela borrowed more than $50 billion from China through loans that were repaid in oil shipments, a practice later replicated in Ecuador. The arrangements were criticized for lack of transparency.
President Donald Trump’s impeachment trial formally opened in the Senate, promising to shape his legacy, deepen the country’s political divisions and influence control of power in the nation’s capital for years to come.
While the president faces little risk of removal from office by the Republican-led Senate, the trial may bring to life new details of Trump’s Ukraine scandal and help sway undecided voters in the 2020 elections.
The nationally televised proceedings will be aimed at voters who will decide in November whether to reward Trump with a second term, and determine which party should control the House and Senate. The conduct of both Democratic and Republican senators -- who will be forced to remain in the chamber during the sessions and abide by strict rules -- will be under a microscope.
Senate Majority Leader Mitch McConnell proposed rules for the trial on Monday that could bring it to a conclusion within days, with much of the action taking place out of public view or in the dead of night.
Trump was attending the World Economic Forum conference in Davos, Switzerland, as the trial was set to start on Tuesday, where he gave a speech seeking to take credit for an economic boom in the U.S. and taking a swipe at environmental “alarmists.”
Argentina's government will send a bill to Congress to restore public debt sustainability, Economy Minister Martin Guzman said, as Latin America's no. 3 economy prepares to confront its looming debt pile.
"This bill, this law (which will be sent to Congress) will give us conditions to be able to structure and execute the operations necessary to achieve the objective of restoring the sustainability of public debt," Guzman said.
Guzman, who has been tapped by new center-left President Alberto Fernandez to lead debt talks, requested that bondholders voluntarily restructure public debt in an orderly way through a "comprehensive macroeconomic program."
Argentina is seeking to negotiate with its creditors for the restructuring of about $100 billion in sovereign debt, which Fernandez has said the country cannot afford to pay until it revives its stalled economy.
Argentina is also continuing talks this week with the International Monetary Fund, which has a $57-billion financing program with the country, Guzman said.
The single currency remains under pressure this week and the recent EUR/USD recovery from the yearly low of 1.1070 has been corrected. The pair predominantly moves sideways at the lower end of their weekly range, while the 55-day SMA limits events.
Risk appetite continues to determine what happens in global markets. The mood is affected by the outbreak of the corona virus in China and its potential impact on global growth.
There are no important economic data from the eurozone today, but the ECB's monetary policy decision is pending and the subsequent press conference by C. Lagarde is also to come.
The pair fell to the new annual low and near the 1.1080 annual low, reflecting increased demand for the greenback. At the same time, everything indicates that an intermediate high was formed at 1.1180. The focus of the market is now shifting to the negotiations of the US-China phase 2 trade agreement. Despite the recent positive data from Germany and the eurozone, the ECB will continue its monetary easing over a longer period. In this context, an update awaits us today, as the ECB's monetary policy decision is pending.
The pair's daily loss is currently -0.08% at 1.1083 and the next support levels are at 1.1070 (2020 low January 22nd), 1.1068 (100-day SMA) and 1.1039 (low 6th December 2019). On the other hand, there are resistances at 1.1132 (200-day SMA), 1.1112 (high January 16) and 1.1186 (61.8% of the 2017-2018 rally).
Gold has not been able to focus on the early rise in the region of $1564 and has now gone into the adverse zone, although it stayed well within the more broad trade reach this week.
Following the moderate overnight intraday recovery from the $1550 area, concerns over the coronavirus outbreak in China proceeded to measure the risk sentiment and provided a slight boost to the presumed safe-haven position of the yellow metal.
A moderate pullback in US Treasury bond yields accelerated the global flight to safety but offered a little additional increase. Non-yielding precious metal immediately hit some new supply and refreshed lows in the last hour.
In the lack of any significant market-driven economic updates from the US, the wider market risk sentiment and the ECB-led market uncertainty could provide some momentum and help traders grab some short-term possibilities on Thursday.
The USD/CAD pair remains higher at the start of the European session on Thursday and is currently close to the new four-week highs set earlier in the day, just above the 1.3150 level.
The pair moves higher for the third consecutive day on Thursday and extends to the strong positive movement of the previous day of around 120 pips , triggered by a more moderate monetary policy statement from the Bank of Canada (BoC).
The BoC , at the last monetary policy meeting on Wednesday, left its interest rate unchanged at 1.75%, but eliminated the reference to the current rate as "appropriate" and lowered the projection of GDP growth for 2020 to 1.6% from 1.8%.
The central bank also showed concern about recent weak data. This, combined with the publication of softer figures of consumer inflation CPI of Canada for December, put a strong downward pressure on the Canadian dollar.
On the other hand, some continuing weakness in crude oil prices , which now fall around 1.5% on the day, has further weakened the demand for CAD, currency linked to raw material prices , which continues to support the continuous positive movement of the pair.
Meanwhile, the renewed demand for safe haven, amid concerns about the outbreak of coronavirus in China, has led to a modest decline in US Treasury bond yields , which kept the bulls upside. USD on the defensive and turns out to be the only factor that limits more USD/CAD earnings .
Speaking at an industry event in Delhi on Thursday, Brazilian energy minister Bento Albuquerque said that Brazil will discuss possible collaboration with OPEC later this year when it meets the Saudi Arabian authorities, Reuters reported.
Meanwhile, the oil price is extending its three-day losing streak today, reaching its 7-week low amid growing concerns about the outbreak of the China virus.
According to recent Reuters headlines, China reported eight more new coronavirus deaths as the virus spreads internationally.
The Japanese yen consolidated on Thursday against its main opponents and pulled the USD/JPY pair to nearly two-week lowering by the middle of 109.00s.
The pair has expanded its multi-month trace decline – set last week – and saw Thursday's third straight session with renewed safe-haven demand as follows.
This combined with possible short-term trading halts activated under a prior resistance has now intensified the bearish pressures all over the area of 109.70.
In the lack of significant economic updates of the sector from the US, there now appears to be some follow-up weakness and an option to challenge 50-day SMA in the area of 109.15.
As per the Karen Jones, Commerzbank's Team Head of FICC Technical Analysis Survey, the pair is confronting the next obstacle in the 1.1130 area at the 200-day SMA.
“EUR/USD continues to hold over the uptrend at 1.1073. The intraday Elliott wave signals remain slightly negative but ideally this trend line will continue to hold. Initial resistance is the 1.1132 200 day ma.”
“Overhead the market is facing tough resistance at 1.1184-1.1240 – namely the 55 week ma, the 2019-2020 down channel and the recent high. This guards the 200 week ma at 1.1359, which continues to represent a critical break point medium term.”
The pre-European session will take place on Thursday and will take place about USD/CHF 0.9683, with the pair bouncing out from the low on Thursday. Moreover, the pair still stays just under the monthly resistance line while the MACD blinks the bearish signals for the first time in a week, which in switch depicts the underlying vulnerability in reminding the bears.
Although 23.6% Fibonacci retracing the pair's drop between December 24 and January 16, at 0.9665, serves as the instant backing, the monthly low around 0.9610 will receive significant focus.
If the sellers rule under 0.9610 at all, September 2018 will be on their radar at a low of nearly 0.9540. During the pair's rebound further than the monthly line of resistance, now near to 0.9720, January 10 will come back to the graphs strong, close to 0.9765.
Fx options expiring today at 10 am NY time via DTCC:
The USD/CAD fell after the publication of economic data from 1.3050 to 1.3034, reaching the lowest level since Thursday. Still it remained within the range of the last days, awaiting the decision of the Bank of Canada.
The inflation data for Canada were slightly below expectations, but without straying too far from previous estimates. The annual CPI remained at 2.2%. In turn, wholesale sales registered a 1.2% drop in November, against the market's expectation that it would remain unchanged compared to October.
The focus is now on what will be at 15:00 GMT the announcement of the Bank of Canada . The expectation is that the reference interest rate will remain unchanged at 1.75%. Even so, the statement will be read closely to see the signals given by the central bank and therefore, a wide impact on the loonie (CAD) would be expected.
From a technical point of view, the USD/CAD continues, as from January 10 moving in a lateral range, between 1.3040 and 1.3080. Although it operated outside this range (earlier today it reached up to 1.3090) it was always quickly rejected, returning to the band. It is expected that the tone of the central bank will generate a strong movement that could lead to the lateral canal being finally broken.
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