All the major U.S. equities; DJIA, SPX, NASDAQ, closed at record highs on Thursday, with the DJIA finally breaking through the 25,000 barrier, representing a one year return of circa 28%. The indices rose despite the USA suffering crippling weather conditions, with many businesses closed. However, equity trading in the SPX was 30% above the thirty day moving average, suggesting that either traders and everyone involved in the investment community are just as efficient and proficient working from home, or more likely; the artificial intelligence and algorithms trading the markets, don’t suffer from the inconveniences us mortal humans experience.
Jobs data published on Thursday for the USA painted an optimistic backdrop to the encouraging manufacturing figures published on Wednesday, weekly jobless claims were down, as are continuous claims. The ADP numbers, the precursor to the NFP number, came in above the forecast of 190k, at 250k. Challenger job cuts came in at a stunning level, at -3.6% and circa 36k for December, it’s the lowest print since 1990.
Traders (and the machines) also had time to analyse the latest minutes from the FOMC/Fed monetary policy meeting held in December. The minutes were released on Wednesday evening and the general consensus from the committee, appears to be a short to medium term policy, based on no risks to the economic recovery, despite the recovery mainly being a financial services and asset based recovery, failing to raise the living standards/income for a huge swathe of Americans; 80% of USA adults own 8% of stocks.
The U.S. dollar experienced mixed fortunes on the day; the dollar index was down circa 0.3%, whilst the dollar fell by approx 0.5% versus the euro and by 0.1% versus sterling. Gold rose to a high of 1,326, a level not seen since September 19th. Despite the Trump administration announcing that all of the USA coast line was now available to drill for oil and gas, WTI oil made little gains.
European markets also reached highs during Thursday’s trading sessions, euro STOXX up 1.68%, DAX up 1.46% and CAC up 1.56%. The U.K. FTSE 100 closed at a record high of 7,695, up 11.35%. The majority of Markit PMI readings either beat or reached forecasts, with Germany and the Eurozone composites delivering highly optimistic readings. The euro closed in on a three year high (January 2015) versus the U.S. dollar. Sterling moved ahead versus certain peers. However, FX traders appear to be exercising caution were the U.K. pound is concerned, they’re still looking for reasons to bid up the pound before Brexit negotiations enter a crucial period over the coming months and the clock beginning to countdown to the March 2019 exit. GPB/USD closed the day out up circa 0.1% on the day.
U.S.DOLLAR.
USD/JPY traded in a relatively narrow bullish range during Thursday, closing out the day up circa 0.3% at 112.7, positioned close to R1. USD/CHF traded in a tight bearish range during the day, closing out down circa 0.2% at 0.974. USD/CAD breached the 100 DMA to the downside on 27th/28th December, the commodity currency pair closed out the day down circa 0.5%, at 1.248, threatening to breach the S2 pivot point level.
STERLING.
GBP/USD finally arrested its recent surge on Wednesday falling by circa 0.7% on the day, regaining some of its lost ground on Thursday, up circa 0.1% at 1.355, ending just above the daily PP. GBP fell versus both AUD and NZD, GBP/CHF whipsawed in a tight range with a bias to the downside, threatening to breach R1, the currency pair reversed direction to end the day down circa 0.2% at 1.320.
EURO.
EUR/USD reached a three year intraday high, closing the day out at circa 1.207, up circa 0.4% just above R1, receding from R2 earlier in the trading sessions. EUR/GBP closed up circa 0.3% at 0.890, resting close to the first line of resistance. EUR/JPY at one stage breached the third line of resistance R3, up an approximate intraday 1% on Thursday, before retracing marginally to end the day up circa 0.8%, at 136.1.
GOLD.
XAU/USD recovered from posting a low of 1305 in the morning sessions, to reach an intraday high of 1325, before closing out the day at circa 1320, circa $50 above the 200 DMA. Price rose by circa 0.4% on the day, closing out above the first line of resistance, despite the risk on mood.
EQUITY INDICES SNAPSHOT FOR JANUARY 4th.
- DJIA closed up 0.61%.
- SPX closed up 0.40%.
- FTSE 100 closed up 0.32%.
- DAX closed up 1.46%.
- CAC closed up 1.55%.
KEY ECONOMIC CALENDAR EVENTS FOR JANUARY 5th.
- EUR. German Retail Sales (YoY) (NOV).
- EUR. German Retail Sales (YoY) (NOV).
- EUR. Euro-Zone Consumer Price Index Estimate (YoY) (DEC).
- CAD. Unemployment Rate (DEC).
- USD. Change in Non-farm Payrolls (DEC).
- USD. Unemployment Rate (DEC).
- USD. ISM Non-Manufacturing/Services Composite (DEC).
- USD. Factory Orders (NOV).
- USD. Durable Goods Orders (NOV F).
