Normally I write my commentary somewhat piecemeal over the course of the day. I let you know what happened in Asia, then Europe and finally the US where I reside. A daily ritual of sifting through a wealth of information, 99% of which you don’t care about and a small balance which you might. Today I decided to wait until the end of the day, put on my slippers and smoking jacket and reflect on proceedings. At first I panic, unable to remember much other than the sushi I had for lunch. But then it all came flooding back – my memory, not the sushi.
Facebook results would set the tone for the new day. Appropriate that the global leader of social media should take center stage from a global public health emergency. Did I just call it a public health emergency? But the WHO said it wasn’t. But of course they could always change their minds…. I digress. So Facebook’s results were less impressive than Manchester United post by Sir Alex Ferguson. The stock immediately tanks 7% and sets the tone for a new day of equity trading. The Hang Seng sheds another 2.4%, the DAX 1.4% and the FTSE 100 1.3%. US futures would indicate a sharp drop at the open and that’s what we got. At one point the DJ was down 244 points with the other major US indices following suit. The Bank of England left interest rates unchanged as was the consensus, but with only 2 rather 3 committee members opting for a rate cut, GBPUSD would immediately bounce from 1.3020 to 1.3100. You just can’t keep a good currency down (yes, I’m British so I can say that). US GDP data would come and go, showing an increase of 2.1% for Q4, bang in line with expectations. Much of the rest of the US day would see various headlines of coronavirus cases popping up around the world including the first person to person infection in the US. XAU would be the main beneficiary, rallying from 1,573 to 1,586. USDJPY would drop below 108.65 and EURJPY would test support at 119.80. EURUSD would head the other way, staying well away from the 1.0980 support I mentioned in my technical blurb yesterday, and testing resistance at 1.1040. Thus far it all makes perfect sense. But that would change courtesy of the World Health Organization. They officially declared the coronavirus a Public Health Emergency. Now call me old fashioned, but that’s probably not a good thing. Especially when you read about planes being stuck on tarmacs, entire cruise ships being put into lockdown mode and one country deciding to quarantine their citizens on an island in the Indian Ocean. However, the US market decided that the calming words of the WHO Chairman was enough to ignore the ongoing crisis and buy stocks and all things risky. To cut a long story short, the DJ rallies to close +125 points taking the other indices with it. EURJPY jumps from 119.85 to 120.25 and USDJPY from 108.70 to 109.00. XAU would drop from 1,586 back to 1573. Once again all is good – apparently. But who I am to judge. Friday should be very interesting, especially as Amazon announced its results after the bell and the share price jumped almost 11%! There, did I remember everything?
Regular readers will know I very rarely put up a short term chart. But today I will make an exception with a 15 minute EURJPY chart. As you can see over the course of this week we have had plenty of chopping around but within a well-defined range of 119.80 to 120.40. More attempts have been made on the downside than the top, but with no greater success. As a pair, EURJPY reacts sharply to any moves in equities, so keep an eye out for this range to break in the coming sessions. Plenty of ways to play it and as always, that’s your choice.