General Market Comment
US indices closed higher on Wednesday after the Fed decided to maintain the federal funds rate at 2.25%-2.5%, as expected. Shares in the Technology Hardware & Equipment (+4.67%), Retailing (+2.75%) and Semiconductors & Semiconductor Equipment (+2.62%) sectors ended higher. On the economic data front, MBA mortgage applications decreased by 3% in week ended January 25th vs. a decline of 2.7% in the previous week. ADP employment change reached 213k in January (estimated 181k) from 263k in December. In other news, pending home sales declined by 2.2% MoM in December (forecasted 0.5%) compared to -0.9% a month earlier. Finally, the Fed decided to maintain the federal funds rate at 2.25%-2.5%, as expected. The Federal Reserve Chairman Jerome Powell mentioned that the case for raising rates “has weakened somewhat” while adding that financial conditions are “less supportive of growth”. The S&P 500 (2,681.05) stays above its 20d moving average (2,602.55 – positive slope) and 50d moving average (2,610.18 – flat slope).
European markets are expected to start on a positive note.
Foreign Exchange
The US dollar was bearish against all of its major pairs on Wednesday. On the economic data front, MBA mortgage applications decreased by 3% in week ended January 25th vs. a decline of 2.7% in the previous week. ADP employment change reached 213k in January (estimated 181k) from 263k in December. In other news, pending home sales declined by 2.2% MoM in December (forecasted 0.5%) compared to -0.9% a month earlier. Finally, the Fed decided to maintain the federal funds rate at 2.25%-2.5%, as expected. The Federal Reserve Chairman Jerome Powell mentioned that the case for raising rates “has weakened somewhat” while adding that financial conditions are “less supportive of growth”.
The Euro was mixed against its major pairs. The euro-zone consumer confidence index was confirmed at -7.9 in January, as expected, vs -6.2 a month earlier. The Germany Economy Ministry slashed its 2019 GDP growth outlook to 1% vs a previous forecast, of +1.8% made last October. Finally, French GDP growth was 0.3% in 4Q in first estimation for 4Q (+0.2% anticipated) vs +0.3% in 3Q.
The Australian dollar was higher against all of its major pairs.
Commodities
After the close of Wall Street, WTI Crude Future (MAR 19) was up $1 to $54.29. The contract was above its 20D MA (@ $51.66) and above its 50D MA (@ $51.07). The US Department of Energy reported that, for the week ended 25 January, crude oil inventories increased 919k barrels compared to the previous week.
Gold was up $7.8 to $1319.6. The precious metal was above its 20D MA (@ $1292) and above its 50D MA (@ $1265). The 14d RSI above 70 (71.29) indicates gold was overbought.
Copper Future (MAR 19) on Comex was up 5.2c to 277.65c/lb. The contract was above its 20D MA (@ 266.5c) and above its 50D MA (@ 271.31c). In Europe, the London Metal Exchange reported its copper inventories increased 1500 tons to 149100 tons