5th January 2021 - AUD/USD slumps to 0.7650 area on strong DXY rebound

Updated: Feb 3


Good Morning,


Market Headlines

Wall St seeing heavy losses of 1.8% across the 3 main indices with the heaviest losses for utilities and real estate related stocks on concerns over the surge in Covid-19 cases seeing the VIX spike 21%. Gold soared to $1,940.00 an ounce as the US session comes to an end, amid renewed risk-aversion. Crude oil prices were dragged lower by equities, with WTI ending at around $47.20 a barrel. Markets will also keep a close eye on Georgia runoff elections which are make-or-break for the Democratic Party. The Republicans currently hold 50 seats in the US Senate and the Democrats trailing behind with 48, the election will determine which party controls the senate.


Currency

AUD/USD: 0.7643 – 0.7740

EUR/USD: 1.2243 – 1.2310

GBP/USD: 1.3544 – 1.3703

USD/JPY: 102.72 – 103.25

USD/CAD: 1.2666 – 1.2798

NZD/USD: 0.7153 – 0.7229

AUD/JPY: 78.81 – 79.56

AUD/NZD: 1.0685 –1.0716


AUD Thoughts

The AUD started the new year on a firm footing and came within a couple of pips of the multi-year high it set at 0.7743 last week. However, the souring market forced the pair to decline sharply in the second half of the day. As of writing, AUD/USD was down 0.65% on the day at 0.7653.


Ahead of the first risk event of 2021, the runoff election for two Senate seats in Georgia, investors seem to be moving to the side-lines. Additionally, the surging number of COVID-19 infections, especially in Europe, revive concerns over nationwide lockdowns hurting the global economic recovery.


Reflecting the negative shift in sentiment, Wall Street's three main indexes are down more than 1.8% after opening at fresh all-time highs. Meanwhile, the US Dollar Index is virtually unchanged on the day at 89.90 with the greenback finding demand as a safe-haven. The souring sentiment seeing the USD gain back some lost ground allowing AUD a decent sell-off and filling some resting demand in the 0.7640/50 area. Looking for further support in this region in the immediate sessions ahead, offers again from 0.7720/40.


Event Risk Data Today

AU – December ANZ Job Advertisements

GE – November Retail Sales

FR – December CPI

GE – December employment data

US – December ISM Manufacturing

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