11th January 2021 - Markets to keep an eye on domestic retail sales figures for direction of AUD

Updated: Feb 3

Good Morning,

Market Headlines

The greenback advanced on Friday despite a disappointing Nonfarm Payroll report, as job losses spurred speculation that more fiscal stimulus is in the docket. President-elect Joe Biden called for immediate further fiscal support, including increased direct payments of $ 2,000. The dollar gains were however modest, with major pairs holding within familiar levels.

Commodity-linked currencies found support in Wall Street, which continued to rally and finished the week near record-highs.

Coronavirus: The US reported on Friday record new contagions above 300K. The UK health system is already stressed, despite the tough lockdown imposed at the end of December. Immunization through different vaccines seems to be picking up pace, which somehow offsets bad news. Markets still believe that economies will recover through the second half of the year.

Overnight Currency Ranges

AUD/USD: 0.7729 – 0.7798

EUR/USD: 1.2193 – 1.2285

GBP/USD: 1.3545 – 1.3636

USD/JPY: 103.61 – 104.08

USD/CAD: 1.2659 – 1.2743

NZD/USD: 0.7206 – 0.7280

AUD/JPY: 80.35 – 80.91

AUD/NZD: 1.0703 –1.0735

AUD Thoughts

Markets will keep an eye on the prospect that the U.S. stimulus policy will be more expansive than previously announced under an “unconstrained” administration. The prevailing mood is that Democrats will reinstate programs that failed to make it into law in December’s stimulus package.

Looking forward, market expectations are that domestic retail sales to rise by 7% which is matched market consensus while in China, expectations is for a flat monthly inflation number.

The AUD/USD is expected to find supply ahead of the recent highs at 0.7820 and again ahead of 0.8000 while demand toward 0.7725 should lend some support before more significant interest at 0.7670/80.

Event Risk Data Today

AU – November Retail Sales

CH – December CPI and PPI

EU – January Investor Confidence

CA – Q4 BOC Business Survey