US stocks rise as investors cheer Apple and Boeing earnings
Global markets were mixed as traders waited for the Fed interest rates decision, which is expected later today. The bank is expected to leave rates unchanged at the current range of 2.25% and 2.5%. As such, traders will focus on the wording of the accompanying statement and the press conference that will follow afterwards. In the conference, they will want to know about the Fed’s assessment of the economy after the last government shutdown. They will also want to know about the number of rate hikes that they should expect this year and the Fed’s plans about the balance sheet. In Asia, the Shanghai index and the Nikkei declined by 0.72% and 0.52% respectively. In Europe, the DAX declined by 0.25% while Stoxx 50 was relatively unchanged.
In the United States, stocks pointed to a higher open as traders focused on corporate earnings. Yesterday, Apple released quarterly earnings that were better than the consensus estimate. In the conference call, the management asked investors to start focusing on its growth in services instead of the iPhone numbers. The markets also reacted positively to the earnings of Boeing, which passed annual revenues of more than $100 billion for the first time in 2018. The two companies were up by more than 5% in the pre-market. Later today, investors will receive numbers from Microsoft, Facebook, and Tesla.
The euro moved slightly higher against the USD after Germany’s consumer climate came out better than investors were expecting. The numbers showed that consumer climate fore February was 10.8, which was better than the expected 10.3. On the negative side, the import price index for December rose by an annualized rate of 1.6%, which was worse than the expected 2.1%. In France, the consumer spending for December declined by -1.5%, which was a sharper than the expected -0.3%. For the EU, the business and consumer survey of 106.2 was lower than the expected 106.8.
In the United States, ADP Research released the reading of January private payrolls that beat the consensus estimates. The numbers showed that the payrolls increased by 218K, which was higher than the forecast of 180K. This number came two days before the official job numbers, which will be released on Friday this week.
The EUR/USD pair was little moved ahead of the Fed interest rates decision. The pair is trading along the 1.1430 level, which is slightly below the resistance level of 1.1450. Because of the recent consolidation, the pair’s price is along the short and medium-term EMAs on the hourly chart. It is however higher than the closely-watched 200-day EMA. Depending on the Fed statement, the pair will likely test the 1.1400 level, which is the 200-day EMA and slightly lower than the 50% Fibonacci Retracement level. In case of a dovish statement, the pair could reach the 1.1490 level.
The GBP/USD pair moved lower as Theresa May tries to restart talks with the European Union. The pair is now trading at the 1.3078 level, which is lower than last week’s high of 1.3215. The price is between the 100% and 61.8% Fibonacci Retracement level. In the American session, the pair could see some more declines to the 1.3050, which is close to the 200-day EMA.
On January 10, the USD/CHF pair started a sharp increase from a low of 0.9715 to a high of 0.9987 as it tried to reach the parity level of 1. The parity is also at a strong resistance level as shown in the chart below. The current level is above the 20-day and 40-day EMA while the RSI has moved closer to the overbought level. There is therefore a likelihood that the pair will remain within these levels as traders wait for the Fed decision.