31 Jan. Dovish Fed send US$ down; stocks, commodities up. Australian PSC, China Mfg PMIs coming up. EU Q4 GDP later.

By | January 31, 2019

 

The US$ has moved sharply lower, while stocks and oil both moved higher after the FOMC decision to leave rates on hold but with a more dovish statement than the market had expected. This removed the reference to further gradual rate increases and added that it is prepared to adjust balance sheet normalisation. Instead, the Fed indicated that it will be “patient” on any future interest-rate moves and signalled flexibility on the path for reducing its balance sheet. In his Press Conference, Fed Chair Powell hedged his bets either way, stating that while the outlook remains solid, there are too many cross currents that confuse the overall picture, and that the Fed will stand on the sidelines to see how developments unfold.

At the end of US trade on Wednesday the DXY was down by 0.4% (touching but holding above the 200 DMA @ 95.25), US stocks rose by 1.7%/2.2%, WTI was up 1.6%, while Gold climbed by 0.8% and Silver by 1.5%. US10Y yields traded at 2.697%.

Earlier in the session, the dollar jumped higher following stronger than expected ADP job report showing 213k job growth in the private sector in January, well above expectation of 170K. The prior month’s figure was revised down slightly from 271k to 263k.

German CPI dropped -0.8% mm in January, matching expectation, but the annual rate slowed sharply to 1.4% yy, down from 1.7% yy, and missed expectation of 1.6% yy.

Thursday will be another busy session, beginning with the release of the Japan Industrial Production for December and the Australian Private Sector Credit  (exp +0.3%) and Import/Export Index and this will be followed up by the China Mfg/Non-Mfg PMIs, with the focus to be on the manufacturing index after it dipped below 50 in Dec. Europe will look to the Q4 EU GDP (exp 0.2%qq, 1.2%yy) to provide guidance as well as the Unemployment data (exp 7.9%) and a speech from the ECB’s Mersch, while the German December Retail Sales (exp -0.6%) and the January Unemployment (exp 5%, -10K) are also due. The US session will feature the Chicago Purchasing Managers Index and the weekly Jobless Claims, while the Buba’s Weidmann will also speak late in the day.

Economic data highlights will include:                                                                                                  

Thur: Japan Industrial Production, Housing Starts, Construction Orders, Australian Private Sector Credit, Import/Export Index, German Retail Sales, Unemployment, EU Q4 Preliminary GDP, Unemployment, US Personal Consumption/Expenditure Index, Chicago Purchasing Managers Index, Jobless Claims

CURRENCIES
EURUSD: 1.1484
Res  1.1500  1.1535  1.1570
Sup  1.1450  1.1425  1.1400
USDJPY: 108.93
Res  109.10  109.40  109.75
Sup  108.70  108.50  108.15
GBPUSD: 1.3112
Res  1.3140  1.3175  1.3205
Sup  1.3080  1.3050  1.3010
USDCHF: 0.9940
Res  0.9965  0.9990  1.0010
Sup  0.9925  0.9900  0.9875
AUDUSD: 0.7251
Res  0.7270  0.7300  0.7325
Sup  0.7230  0.7205  0.7180
NZDUSD: 0.6895
Res  0.6910  0.6930  0.6950
Sup  0.6880  0.6860  0.6840
INDICES / COMMODITIES
S&P.fs: 2677.28
Res  2690.00  2710.00  2730.00
Sup  2660.00  2640.00  2620.00
DJ30.fs: 24948.00
Res  25050.00  25105.00  25170.00
Sup  24895.00  24825.00  24745.00
SPI200.fs: 5844
Res  5870  5895  5925
Sup  5810  5780  5755
XAUUSD: 1319.10
Res  1325.00  1330.00  1335.00
Sup  1315.00  1310.00  1305.00
XAGUSD: 16.05
Res  16.10  16.15  16.20
Sup  16.00  15.95  15.90
WTI.fs: 54.26
Res  54.90  55.35  55.80
Sup  53.85  53.35  53.00