Global stocks waver ahead of blockbuster US earnings
Global stocks are mixed today as traders wait for important corporate earnings from the United States and the Fed interest rate decision. In Europe, the DAX index, FTSE 100, and CAC 40 dropped by more than 0.20% while in Asia, the Hang Seng and Nikkei 225 indices rose by more than 2%. In the United States, futures tied to the Dow Jones and S&P 500 are also mixed. Some of the biggest companies that will deliver their earnings include Apple, Tesla, General Electric, and Facebook. They will provide clear guidance on the state of the global economy and set the mood for stocks in the first quarter.
The euro declined against the US dollar after the important survey numbers from Germany. According to the ifo Institute, the German current assessment dropped from 91.3 in December to 89.2 in January. This was lower than the expected 90.6. In the same period, the business expectations and business climate dropped to 91.1 and 90.1, respectively. In general, business executives are worried about the new coronavirus outbreak and deteriorating demand. These numbers came a few days after the ECB delivered its interest rate decision.
The US dollar index bounced back today as the coronavirus risks emerged. This happened as US media reported that Joe Biden was set to announce a new ban on flights from more than 20 countries like the United Kingdom, Ireland, and South Africa. The news came as the new administration is fighting the new coronavirus pandemic. Similarly, the number of cases in countries like Germany and China has continued to rise. The dollar is also rising ahead of the FOMC decision and the US GDP data set for Thursday.
The EUR/USD pared-back earlier gains due to the overall stronger US dollar. The pair is trading at 1.2152, which is slightly below the day’s high of 1.2195. On the four-hour chart, the price has formed a head and shoulders pattern and is now slightly below the right shoulder. It is also trying to move below the 25-day moving average. Therefore, there is a possibility that the pair will continue falling as bears target the neckline that is at 1.2054.
The USD/JPY pair is little changed today ahead of the Bank of Japan minutes. It is trading at 103.82, where it closed last week. On the four-hour chart, the pair seems to be forming a bullish flag pattern that is shown in yellow. It is now slightly below the upper side of this flag and is above the 25-day and 15-day moving averages. Therefore, the pair will likely break-out higher with the next target being at 104.37.
The FTSE 100 index declined to an intraday low of £6,666 ahead of key earnings from the United States. On the four-hour chart, the pair is slightly below the descending yellow trendline. It is also slightly below the 25-day and 15-day moving averages while the MACD is below the neutral line. Therefore, the pair will likely continue falling as bears target the support at £6637.