- Demand for the greenback triggered by fear, exacerbated by thin market conditions.
- Tech shares collapse after Apple cut its revenues, amid weak Chinese sales.
Risk aversion dominates the beginning of the Asian session, exacerbated by thin volumes at this time of the day. Fears of a global economic downturned dominated the Asian and European sessions this Wednesday, following soft business activity indexes from China to the US. In the Union, business activity fell into contraction territory in December in Italy and France according to the final Markit Manufacturing PMI, while for the whole EU, the index came as expected at 51.4, down from 51.8 in November, the lowest reading seen since February 2016.
Things improved after Wall Street's opening, as US shares trimmed pre-opening gains, with the three major indexes finishing the session with modest gains. But after the close, Apple issued a warning, announcing it now sees first-quarter revenue of $84 billion vs. previous guidance of a range of $89 billion and $93 billion, attributing the cut to weak Chinese sales, bringing the negative sentiment back. The Dow Jones Industrial Average, which closed at 23,346.24, now trades barely above the 23,000 level, shedding over 300 points in a matter of minutes. US Treasury yields also extended their rout, with the benchmark yield for the 10-year not now at 2.63%, its lowest in almost a year.
The EUR/USD pair trades now around 1.1340 and is technically bearish according to Valeria Bednarik, FXStreet chief analyst, as she states: " according to readings in the 4 hours chart, as the price has fallen below all of its moving averages, while technical indicators barely decelerated their declines once nearing oversold readings. The pair has some relevant daily lows around 1.1310, now the immediate support, with a break below it opening doors for a re-test of 2018 low at 1.1215."
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