11th February 2021 - Bears seeking a run to a 38.2% Fibo retracement

Good Morning,

Market Headlines

Wall Street hit record highs in pre-opening trading, but suffered from a sharp U-turn, to close the day mixed. Major indexes trimmed most of their losses and posted modest intraday gains, but pushed Asian and European futures lower, anticipating some risk-off in early Thursday's trading. There was no particular catalyst behind the slump, although some analysts attribute it to profit-taking.US Federal Reserve chief Jerome Powell offered a speech in the American afternoon but reiterated well-known concepts regarding Fed’s monetary policy. His world passed unnoticed for currencies but helped stocks to recover.

Japan celebrates a holiday, while Chinese markets will be closed starting Friday, amid the New Year celebrations. Volumes may shrink, and trading could be choppy. Commodities, Brent crude oil futures rose 0.6% to $61.50 to a fresh 12-month high, copper rose 1.3% to an eight-year high, gold rose 0.2%, and iron ore rose 5.0% to $163.30.

Overnight Currency Ranges

AUD/USD: 0.7720 – 0.7756

EUR/USD: 1.2113 – 1.2144

GBP/USD: 1.3811 – 1.3865

USD/JPY: 104.41 – 104.84

USD/CAD: 1.2669 – 1.2710

NZD/USD: 0.7200 – 0.7246

AUD/JPY: 80.79 – 81.11

AUD/NZD: 1.0696 – 1.0723

AUD Thoughts

The Lunar New Year has begun and China’s absence for a week typically has a strong impact on liquidity and flows during the Asian time zone. With little on the data calendar, a quiet run into the weekend is expected and any direction is likely to be driven by developments in the Northern Hemisphere.

AUD/USD remained in a tight 0.7720/56 range overnight with topside resistance still expected ahead of the recent highs at 0.7820. Downside bids accumulating nearer 0.7680 and again at 0.7620

Event Risk Data Today

Australia: MI consumer inflation expectations remain firmly below pre-COVID levels ahead of the February update.

NZ: Markets expect that the January retail card spending report will show that annual spending growth has cooled, mainly due to the loss of high-spending international visitors during the peak of the tourist season.

US: Initial jobless claims have been gradually trending down after a spike in early January. Non-farm payrolls are also pointing to a broader labour market recovery in the new year. The market expects that claims moderated further over the week ended 6 Feb, to around 758k.