We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The $AUD may suffer as relations between Australia and China deteriorate amid dwindling growth prospects. Euro traders will be closely watching progress in talks about a €500b recovery fund proposal. Get your market update from @ZabelinDimitri here: https://t.co/LkEFJViPWY https://t.co/sofO135ElG
  • The US Dollar could rise against #ASEAN currencies such as the Singapore Dollar as US-China tensions seem to escalate. The Indian Rupee is also looking ahead of local 1Q GDP data. Get your ASEAN currencies market update from @ddubrovskyFX here:https://t.co/LkEFJViPWY https://t.co/ZGFaQQ3Hr2
  • The #Euro is the big driver here for DXY as it is 57% of the index. It is rising now and trying to break above the March 27 high at 11147. Get your $EURUSD technical analysis from @PaulRobinsonFX here:https://t.co/6gt3F9LuGP https://t.co/73SaL5AeXD
  • U.S. Market Analyst at https://t.co/JsVsSmefgR, Shain Vernier covers - ✔️ Safe haven assets in volatile markets ✔️ Central banks and governments ✔️ How will commodities trade in a recession Only on Trading Global Markets Decoded #podcast. Tune in here: https://t.co/1UmEzEbwiy https://t.co/EIC9YqfTec
  • Anybody else think that casting directors in movies are some of the most underrated people when it comes to giving a film/series credit?
  • No https://t.co/EoBltaP17k
  • Crude #oilprices may face heightened liquidation pressure as the cycle-sensitive #commodity finds itself under the pressure of resilient resistance and a vulnerable, multi-week rising channel. Get your crude #oil market update from @ZabelinDimitri here: https://t.co/cGPX4qcOH1 https://t.co/0U4JMJVFuf
  • The @ecb will likely boost its Pandemic Emergency Purchase Program at Thursday’s meeting of its Governing Council; a move that could give the #Euro a lift. Get your currencies market update from @MartinSEssex here: https://t.co/I4PbmJNG1z https://t.co/hu6Ld1KdDB
  • $GBPUSD doesn’t have the cleanest set of technical indications, but #USD may give indications if it can break its trading range via the $DXY. Get your currencies market update from @PaulRobinsonFX here: https://t.co/PrC9wAaXvU https://t.co/vHYHflwqR3
  • The ongoing contraction in US production may keep #oilprices afloat in June as crude output falls to its lowest level since October 2018. Get your crude #oil market update from @DavidJSong https://t.co/jj1bMLX0DF https://t.co/O9NOqbfHkb
S&P 500 Sinks on Earnings as Oil Price Flops, US Dollar Jumps

S&P 500 Sinks on Earnings as Oil Price Flops, US Dollar Jumps

2020-04-15 21:53:00
Rich Dvorak, Analyst
Share:

S&P 500 INDEX GIVES BACK GAINS AS EARNINGS SOUND THE ALARM, OIL PRICE PLUNGES BELOW $20 DESPITE SUPPLY CUTS, US DOLLAR RISES ON SAFE-HAVEN FLOWS

  • S&P 500 Index spikes lower on the back of alarming earnings reports from big banks that hint at the potential avalanche of defaults looming due to the coronavirus recession
  • Crude oil trades beneath the $20.00 price level and at fresh 18-year lows after dropping another 30% from its month-to-date high despite historic OPEC+ supply cuts
  • US Dollar leaps higher as the broader DXY Index bounces off its 50-day moving average and the IMF rekindles risk aversion with its gloomy GDP growth forecast

Market volatility is back on the rise alongside fading coronavirus optimism. As investor risk appetite begins to recede, possibly fueled by the latest IMF report and its ominous World Economic Outlook for 2020, the S&P 500 Index looks primed to resume its slide.

US 500 MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -10% 0% -3%
Weekly -2% -7% -6%
Learn how to use sentiment in your trading strategy
Get My Guide

A somber start to S&P 500 earnings season threatens to pressure stocks lower as well. Traders initially looked past downtrodden bank earnings from JPMorgan Chase, Bank of America, Wells Fargo and Citigroup, but details from their quarterly results nonetheless struck a pessimistic tone for the broader market.

S&P 500 INDEX PRICE PRESSURED BY SOMBER BANK EARNINGS, EXPECTED LOAN DEFAULTS AS CORONAVIRUS RECESSION WEIGHS

S&P 500 Index Price Chart Bank Earnings JPMorgan Chase Wells Fargo Bank of America Citibank

Chart created by @RichDvorakFX with TradingView

The four largest US banks by market cap have materially underperformed the S&P 500 Index since the sharp selloff from its record high printed mid-February. That said, sharp declines in top bank stocks could cause the S&P 500 to gravitate lower and erase its recent rebound amid an earnings season like none other.

Trading Forex News: The Strategy
Trading Forex News: The Strategy
Recommended by Rich Dvorak
Read up on strategies for analyzing and trading market news
Get My Guide

Not only were earnings from JPMorgan Chase, Bank of America, Wells Fargo and Citigroup disappointing on the surface, their financial statements all shared an alarming anecdote: skyrocketing loan loss provisions set aside to cover debt defaults. Specifically, they earmarked a staggering $24 billion in cash to cushion the amount of nonperforming loans expected to spike due to the likely unavoidable coronavirus recession.

CRUDE OIL PRICE CRASHES TO 18-YEAR LOW DESPITE HISTORIC OPEC+ SUPPLY CUTS

Crude oil price chart oil demand woes due to coronavirus recession dwarf OPEC+ supply cuts

Chart created by @RichDvorakFX with TradingView

Also, another plunge crude oil prices, even despite historic supply cuts from Saudi Arabia, Russia and other OPEC+ members, likely leaves the recent S&P 500 rally in jeopardy. It is possible that more pain lies ahead for the economy, as well as the S&P 500 Index, considering the break-even price for US shale oil producers is approximately $50.00 per barrel – far below where spot crude oil trades currently.

Traits of Successful Traders
Traits of Successful Traders
Recommended by Rich Dvorak
Find out if you share the top traits of successful traders
Get My Guide

After sinking about 70% from its January high, crude oil now fluctuates around the $20.00 handle and 18-year lows. Yet, the commodity still might face further downside. This is seeing that crude oil demand woes will likely trump OPEC+ supply cuts as recession risk intensifies and global GDP growth forecasts continue to nosedive. In turn, this has potential to aggravate already-stressed financial market conditions and deal another major blow to investor risk appetite.

US DOLLAR DOMINANCE MAY LINGER AS SAFE-HAVEN ASSETS LIKELY REMAIN IN DEMAND

DXY Index Price Chart US Dollar Safe Haven S&P 500 Earnings Season

Chart created by @RichDvorakFX with TradingView

However, as the mood on Wall Street sours while crude oil drops and the S&P 500 earnings season disappoints, the US Dollar might snap back to recent highs. On that note, the parabolic climb notched by the US Dollar against its Mexican Peso peer, owing to a 30% surge in USD/MXN price action since February 17, stands out in particular. Measured by the broader DXY Index, the US Dollar has gained 3% year-to-date on balance, but the benchmark is currently perched 3% below its March 23 peak.

Top Trading Opportunities in 2020
Top Trading Opportunities in 2020
Recommended by Rich Dvorak
Discover our latest list of top trading opportunities
Get My Guide

Nevertheless, with the S&P 500 Index more than 25% off its lows, it appears increasingly likely that overexuberant investors may soon face a harsh reality check as equity earnings, in addition to key leading economic indicators, reveal the dire impact COVID-19 has had on businesses and consumers. Correspondingly, if another wave of risk aversion prompts traders to liquidate stocks and hoard cash, the US Dollar might get a boost from its posturing as one of the top safe-haven currencies once again.

Keep Reading: US Dollar Eyes Coronavirus Impact on S&P 500 Earnings Season

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.