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Andreas Zanin
Analysis | January 28, 2021

KTM FX Daily: FX overview; Apple, Facebook and Tesla earning reports and chart patterns

  • Dow tanks 600 points, S&P ends below 3800 on a broader selloff
  • G10 currencies fell between 1.50-0.50% against the dollar
  • Dovish Fed, mixed earning reports

Global shares tumbled sharply on Wednesday on dovish Fed and speculation concerns, which led to broad selling pressure across the board. The Cboe volatility index rallied more than 60% to 37. Overall a risk-off session with bonds slightly higher and equities and yields end at the other side.
The UST 10yr yield closed at 1.04%, down -1bps with the bond market’s version of aversion. Their 2-10 rate curve is flatter at +89 bps.

Equities:

Indices were down sharply, with Nasdaq 2.4% down and Dow and S&P down 2% each. Except for Nasdaq, both the indices changed the color red for the year. In Europe German blue-chip benchmark index DAX down 1.7%, and UK’S benchmark index FTSE closed 1.30% lower.
Eshe Nelson at Nytimes said, “The selloff came amid a speculative frenzy in some corners of the market that drove up shares of some mostly small, struggling companies.”

Does the USD rally have more legs?
The dollar outperformed against the basket of currencies on Wednesday but still trading below the 50MA and the 10-month descending trendline.
The index has been developing an inverse H&S pattern, but the price is still trading below the neckline (see below). A breakout above 91 could allow the index to rally further towards 92, its 100MA.

Identical patterns:  H4 USDX = H4 USDCAD-H4 USDCHF.

FOMC review:

As expected, US Federal Open Market Committee left its policy settings unchanged at 0%-0.025% funds rate range. The Fed will also continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month.

Highlights:

  • The recovery pace in economic activity and employment has continued to recover. Still, it remains well below its levels at the beginning of the year has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic.
  • The path of the economy will depend significantly on the virus’s course, including progress on vaccinations.
  • The Fed statement highlighted that QE will be maintained “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals. “

Earnings summary:
KTM Symbols (TSLA, APL and, FB): Tesla, Apple, and Facebook numbers are out. Here are the number from CNBC.
Finally, Tesla’s stock falls4.50% late after closing down 2%, as of Q4 miss on profit.

  • Earnings: 80 cents adj. vs. $10.03 per share expected.
  • Revenue: $10.74 billion vs $10.4 billion expected

Facebook (FB): Facebook shares fell 3% as Q4 2020 earnings results show lower than expected. The company warns of the impact of Apple privacy changes.

  • Earnings: $3.88 per share vs. $3.22 per share forecast by Refinitiv
  • Revenue: $28.07 billion vs $26.44 billion forecast by Refinitiv
  • Daily active users (DAUs): 1.84 billion vs. 1.83 billion forecasts by FactSet
  • Monthly active users (MAUs): 2.8 billion vs. 2.76 billion forecasts by FactSet
  • The average revenue per user (ARPU): $10.14 vs. $9.49 forecast by FactSet

Apple (APL): Apple surpasses $100 billion in quarterly revenue for the first time in its history as iPhone 12 sales surge, as per sources.  Apple cited, “iPhone, Wearables, and Services set new revenue records.”

The official press release brought in that “The Company posted record revenue of $111.4 billion, up 21 percent year over year, and quarterly earnings per diluted share of $1.68, up 35 percent”.

Highlights: Revenue up 21 percent and EPS up 35 percent to new all-time records.

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