Sentiment reversed overnight, the S&P500 currently down 1.9%. Some attributed the decline to asset liquidation by hedge funds exposed to a recent short-squeeze. The defensive US dollar rose, and bond yields fell. The Fed remained on hold, but the closely-watched press conference is currently in progress. Commodities, Brent crude oil futures rose 0.3% to $56.05, copper fell 1.6%, iron ore rose 0.5% to $165.60, and gold fell 0.3%.
Overnight Currency Ranges
AUD/USD: 0.7644 – 0.7745 (3 week low)
EUR/USD: 1.2058 – 1.2166
GBP/USD: 1.3659 – 1.3759
USD/JPY: 103.63 – 104.18
USD/CAD: 1.2711 – 1.2823
NZD/USD: 0.7147 – 0.7237
AUD/JPY: 79.58 – 80.29
AUD/NZD: 1.0683 – 1.0710
AUD bounced off the key technical support overnight at 0.7640 overnight but was still soft in the final hours of trade. Demand is still expected ahead of 0.7640 but it is unlikely to slow it significantly again if investor sentiment remains low while offering interest has grown in the 0.7720 region with the key level still at 0.7820.
Event Risk Data Today
Australia: The Q4 export price index is expected rise 4.0% on higher commodity prices, notably iron ore. Meanwhile, markets are expecting a 1.5% fall in the Q4 import price index as the strong AUD drives cheaper imports.
New Zealand: Markets are expecting that the December Trade Balance will increase to +$1450m as import disruptions continue.
Euro Area: Despite clear headwinds facing the bloc, January economic confidence will be supported by the ECB’s commitment to ongoing monetary stimulus (market f/c: 89.5).
US: Initial jobless claims will be released for the week ended Jan 23rd. Claims stabilised in the last update after spiking the week prior (market f/c: 875k). Finally, Q4 GDP is set to expand 3.9% (annualised); the recovery slowed abruptly in the December quarter as COVID-19 cases surged.