Yesterday, Wall Street rallied sharply with the Dow and Nasdaq gaining by 400 and 210 points respectively. This came after sharp declines from the previous day. However, all changed during after-hours trading when top technology companies announced their earnings. Amazon and Alphabet reports missed analysts’ forecasts, which led to a sharp decline in their stocks. Amazon fell by 7.5% while Alphabet declined by 4% causing the technology sector to lose more than $100 billion in value.
The US dollar rose yesterday after the inaugural speech by Richard Clarida, the Trump-appointed Vice Chairman of the Federal Reserve. In his speech, he said that the US needed more rate hikes to sustain a healthy and robust economy – a likely disappointment for Trump who nominated him. This week, the President continued his criticism of the Fed stating he ‘maybe’ had regrets for nominating Jerome Powell as FED chair. “It almost looks like he’s happy raising interest rates” Trump proclaimed.
The Japanese yen rose against the USD after Japan released inflation numbers for Tokyo, the biggest city in Japan with a population of almost 10 million people. In September, the core CPI for the city was 1%, which was unchanged from that of August. At the same time, the headline CPI rose from 1.3% to 1.5%. In the United States, an important inflation number that measures the 10-year breakeven inflation rate declined to 2.05%, which was the lowest level since January. Today, this pair will likely be moved by the US GDP numbers.
EUR/USD
The EUR/USD pair declined to an intraday low of 1.1355. This was the lowest level since August 15 and was a reflection of the stronger dollar. This decline was a continuation of a trend that started on September 25 when the pair reached a high of 1.1815. The price is along the lower line of the Bollinger Bands while the RSI is at the oversold level of 30. As the pair nears the previous low of 1.1300, there is a possibility that the downward momentum will reduce. Therefore, while the pair will likely continue moving down, it is important to be cautious about a short-term bounce.
USD/JPY
Over the past week, the USD/JPY pair has moved on a wide horizontal channel that has ranged from 111.60 and 112.88. In the Asian session today, the pair fell to an intraday low of 112.10. As the horizontal trend continues, it is likely that the pair will continue moving lower to test the important support of 111.94. This movement looks set to be influenced by today’s GDP numbers and a likely sell-off in the stocks market.
NAS100
The Nasdaq index is the largest technology-focused index in the world. It is made up of blue chip stocks like Alphabet, Amazon, and Apple. In the past month, the index has fallen sharply from a high of $7710 to a low of $6800. The Nasdaq futures fell during the Asian session to a low of $6775 as technology companies’ earnings disappointed. This price is below the 28 and 14-day EMA while the RSI on the four-hour chart is close to the oversold level of 30. There is a likelihood that the index will continue to decline today. However, there is also a possibility that it will recover as the new month approaches
