Daily Analysis: Stocks Stay Bullish as Dollar Rally Fizzles

Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2502 -0.12%
DAX 12600 0.25%
WTI Crude Oil 50.55 -0.22%
GOLD 1295.00 -1.61%
Bitcoin 3658 -5.89%
EUR/USD 1.1936 0.35%

The Fed’s “historic” monetary meeting resulted in a strong initial move by the Dollar and a less pronounced dip in equities, as markets were surprised by the hawkish tone of the central bank. The move in the currency got mostly reversed against the Euro and the Pound today, while the Yen remained under pressure, together with gold. The safe-haven assets hit new multi-week lows, with the precious metal dipping below the key $1300 level, probably concluding its correction.

Donald Trump announced a new wave of sanctions against North Korea recently, but the move didn’t cause major movements in the markets, and most asset classes are near their pre-Fed levels, as only short-dated Treasuries were re-priced thanks to the hawkish Fed statement.

DXY, Daily Chart Analysis

Central bankers caused some turmoil down under as well, with the Aussie and the New Zealand Dollar reversing some of their recent gains after the RBA governor Lowe’s dovish words.  Stock markets barely budged, proving their relative strength yet again, and Japanese and European equities hit new rally highs in early trading. The major US indices are still just below their all-time highs, with continued strength in the financial sector, and a slightly lagging tech segment.

AUD/USD, 4-Hour Chart Analysis

Cryptocurrencies

Bitcoin and Ethereum are leading the market lower yet again as the forces that led to the deep correction remained dominant even after last week’s crash and the following surge. Almost all of the major coins are still in short-term downtrends, with only IOTA and Dash showing meaningful relative strength before today’s bearish shift. BTC quickly declined below the key $3800 support, and it’s now likely headed towards $3500 while a re-test of the crash lows is also in the cards, despite the much-improved long-term prospects.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The DAX continues to drift higher in the face of the short-term overbought readings on the MACD. The German index is very close to the next major resistance level at 12,650 and a rally towards the 12,825 level is also very likely in the coming week. Another leg higher in the Euro could hold the rally for a while, but as long as the relative strength of European equities persists, short-term traders should buy the dips.

DAX, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
Tent. JAPAN BOJ Rate Decision -0.10% -0.10% -0.10%
Tent. JAPAN Monetary Statement
14:30 CANADA Wholesale Sales -1.5% -0.9% -0.5%
14:30 US Unemployment Claims 259,000 300,000 284,000
14:30 US Philly Fed Index 23.8 17.2 18.9

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
9:30 GERMANY Manufacturing PMI 59.0 59.3
9:30 GERMANY Services PMI 53.8 53.5
10:00 EUROZONE Manufacturing PMI 57.2 57.4
10:00 EUROZONE Services PMI 54.8 54.7
14:30 CANADA CPI Index 0.2% 0.0%
14:30 CANADA Retail Sales 0.4% 0.7%

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.