The US Dollar continues its upward trend, increasing in value against all major currencies. The exchange rate seeing the largest price movement in favour of the Dollar is the USD/JPY. The exchange rate witnessing the weakest price movement in favour of the Dollar is the “cable”, as the Pound spent most of the day appreciating in value against most currencies. Nonetheless, even the Pound renewed its monthly lows before correcting back upwards.
The Pound was positively influenced by the Bank of England Governor’s speech from yesterday. The governor advised economists that the UK is experiencing what is known in economics as the “second round effects”, which is a type of salary spiral. As inflation increases, workers negotiate and demand higher wages to offset the higher cost of living. However, this keeps demand high and can make inflation more sticky. The Governor also advised the central bank to continue increasing interest rates “as necessary”. Investors positively reacted to the comments.
In addition to the above, the US stock market also saw a buyer surge during yesterday’s US trading session. The Dow Jones rose 1.24%, the NASDAQ rose 1.22%, and the S&P 500 rose 1.19%. Investors have specifically fixed their eyes on the NASDAQ and are contemplating whether the index will continue to rise above the resistance level from August 2022. The price is currently hovering at 0.85% lower than the previous point of collapse from August.
NASDAQ
We evaluated the influencing factor impacting the NASDAQ in yesterday's market analysis. This includes both its upward trend and the resistance level. However, as mentioned above, investors’ decisions would be strongly influenced by the latest earnings reports from Cisco. Cisco Systems recently released its earnings, which outperformed the market’s expectations. The company revenue was 1.50% higher than the markets were expecting. The company’s Earnings Per Share came in 3.25% higher.
Investors will now primarily concentrate on the earnings reports scheduled to be released today before the market opens. Markets are expecting Walmart to show slightly lower earnings compared to the previous quarter. The company's revenue is expected to decline from $158 billion to $147 billion. Walmart’s earnings per share are expected to decrease from $1.51 to $1.32. In addition to Walmart, market participants await the release of Alibaba’s quarterly earnings. Neither Walmart nor Alibaba is a component of the NASDAQ. However, the company's earnings will affect the overall investor sentiment.
The regression channel on both the 4-Hour chart and the 1-hour chart indicates an upward price trend. In addition to this, moving averages and the stochastic oscillator also have formed an upward crossover. Both indicate a potential upward trend. The only concern for investors is the price is showing an overbought price on a Relative Strength Index.
EUR/USD - US Dollar Soars
The EUR/USD exchange rate price is declining during this morning’s Asian session. The bearish impulse wave measures 0.26% and attempts to correct the previous upward surge. If the price continues to decline below the 1.08098 rates, indicators may provide further signals for downward price movements.
The main European economies, including Germany and France, have a bank holiday today. For this reason, no economic events are scheduled for European markets. Investors will largely concentrate on the US Unemployment Claims, which has risen for three consecutive weeks. The US employment sector remains tight. Investors will continue monitoring if the restrictive monetary policy will start to pressure employment.
Federal Reserve Bank of Cleveland President, Loretta Mester, advises the conditions for a pause in the monetary tightening cycle have not yet come, and officials need to have more evidence that inflation has begun a steady decline.
Summary:
- The US Dollar continues its upward trend, increasing in value against all major currencies.
- The Governor also advised the central bank to continue increasing interest rates “as necessary”. Investors reacted positively to the comments.
- Cisco Systems recently released its earnings, which outperformed the market’s expectations. The company revenue was 1.50% higher than the markets were expecting. The company’s Earnings Per Share came in 3.25% higher.
