USD Falls, Stocks Boosted by Alphabet Earnings
02 February 2022
Sentiment remained optimistic on Wednesday, supported by the recent decline of the greenback.
At the same time, Alphabet (Google) announced solid earnings, boosting US equity indices.
The company reported record quarterly sales as its internet advertising business surged on consumers using Google search, and advertisers lifted their marketing budgets. Alphabet also announced a 20-for-one stock split, making it more affordable for smaller investors to buy the stock.
Earlier this week, St. Louis Federal Reserve President James Bullard, often seen as one of the more hawkish of the Fed policymakers, said he prefers successive rate increases at the Fed's March, May, and June meetings. But he disagreed with the idea of starting with a half-percentage point hike in March, saying markets have already begun to push up borrowing costs.
Additionally, Federal Reserve Bank of Kansas City President Esther George, another hawk, said the Fed should be cautious and take less aggressive actions in raising interest rates by shrinking the balance sheet more forcefully.
The USD has continued to decline after these comments, while the US yields stalled near their cycle highs. However, it looks like we might have seen the top both in yields and USD for now.
The recent decline of the EURUSD below cycle lows at 1.12 to kill stop-losses could have been a bearish trap, usually leading to a strong bullish rally, which has already started. The next target for the pair is at 1.1310, followed by the selling zone some 80 pips higher.
Elsewhere, oil continues in its uptrend, sending the WTI benchmark above 88 USD, probably attacking the 90 USD threshold this week.