Daily summary: Markets move up, key reports ahead

• US Indices move up for the second day
• AUD down despite higher inflation
• FOMC adjusts IOER rate, little market reaction
• Key reports still ahead

Normally the Fed is the highlight of the week, sometimes of the month – but that wasn’t the case today. The Fed maintained policy rate unchanged and adjustment of the IOER rate from 1.55 to 1.6% is mostly technical but Chairman Powell sounded as if it was the first step towards withdrawing T-bill purchases and repo operations in the second quarter although he also stressed the Fed want to maintain ample reserves of at least $1.5 trillion at any time and hinted the central bank could always act to ensure that reserves do not fall below that point. So while this is a preparation for exit strategy, it’s hard to call it hawkish.

The main focus remains on virus and although the number of detections and victims continues to increase at a significant pace, investors seem to get used to the situation and could only react to major new impulses. One of such impulse could have been a decision from the British Airways to freeze flights to China but that wasn’t enough to break market confidence today. However, the situation remains very fluid and further signs of virus spread can lead to renewed risk-off.

Indices in the US were well supported after Apple (AAPL.US) presented solid Q4 report with higher EPS and revenues up nearly 9% y/y. Good moods were present in Europe where ITA40 soared to the highest level in nearly 12 years (Salvini’s loss in local elections played a role too).

Data-wise AUD was initially supported with a higher-than-expected quarterly inflation (+0.7% q/q) that could undermine hopes for the RBA cut but at the end of the day the Aussie slipped under pressure from declining commodity prices. FX moves were really minor – the key thing here is EURUSD and GBPUSD defending their supports so far (1.10 and 1.30 respectively).

In the commodity area Gold and Silver recovered somewhat despite upbeat moods, Oil was narrowly down as higher inventories capped recovery hopes and Copper prices continued to tumble to trade at the lowest level since early October. Investor can be concerned that the virus could hit construction activity in China.

While the Fed wasn’t a market mover investors are still awaiting key quarterly reports on Wall Street with Tesla and Facebook releasing their reports today in the evening. Thursday will see the US GDP data, Bank of England decision and the report from Amazon – just to name those the most crucial events.