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Wall Street gains for second day in a row, USD gets back to losses


  • US stock markets gained on Monday for the second session in a row after the ugly past week
  • Asian equities perform quite well except for Japan, JPY benefits from the lower NIKKEI (JAP225 on xStation5)
  • Australian dollar trades broadly flat despite upbeat soft indicators

After the tumultuous week the US indices seem to have gotten back some of its lost appeal. As a result, US stocks gained on Monday for the second straight session with broad-based rises across indices. The Dow Jones (US30) turned out to be the best performer as it added 1.7%, the NASDAQ (US100) moved up 1.55% while the SP500 (US500) grew 1.4%. Even so, a technical view seems to point that a major obstacle for bulls seems to be intact, therefore an ultimate comeback to an uptrend cannot be announced yet. Among possible reasons standing behind a surge seen on Wall Street was a $4.4 trillion budget plan for fiscal 2019 unveiled by President Donald Trump yesterday. It includes as much as $200 billion spending for infrastructure, over $23 billion for border security and immigration enforcement and $716 billion for military programs. What could be regard as the paramount point of the Trump’s speech is that it acknowledged for the first time that the Republican tax overhaul passed at the end of the last year would add billions to the deficit and not "pay for itself".

link do file download linkWhile Wall Street marked decent gains on Monday, the NASDAQ was unable to close above a relevant resistance level. That said, another pullback to the downside cannot be ruled out. On the flip side, a breakout of 6545 points would lead to a resumption of an uptrend. Source: xStation5

link do file download linkBusiness confidence and conditions across Australian companies improved in January. Source: Macrobond, XTB Research

Improved moods in the United States were witnessed in Asia as well where the two major Chinese indices climbed. The Australian benchmark (AUS200) was also higher after upbeat soft indicators coming from the domestic economy. Namely, business conditions picked up from 13 to 19 points whereas business confidence rose from 10 (revised down from 11) to 12 during the first month of the year. The sole laggard was the Japanese NIKKEI (JAP225) as it closed down 0.65%. When the NIKKEI goes down the JPY goes up and this scheme repeated today as well. Consequently, the Japanese currency in the strongest one within the G10 basket advancing almost 0.5% against the greenback. On top of that, one cannot miss that the US dollar is again the weakest currency compared to its major peers and as a result the EURUSD has already come back above a 1.23 handle.

link do file download linkThe USDJPY is hovering close to its crucial support area slightly above 108. However, even a breakout of this level cannot be a premise of a decline as we had a false breakout in September 2017. Having said that, the most possible scenario as for now appear to a bounce toward 111 if the US dollar keeps improving in the short-term. Source: xStation5


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