7th January 2021 - AUD/USD slips back under 0.7800 level as USD stages modest recovery

Updated: Feb 3

Good Morning,

Market Headlines

The dollar enjoyed from some temporal demand, but once again finished the day with losses and near multi-year lows against most of its major rivals. At the time being, there’s no official confirmation but seems the US Georgia Senate election was led by the two Democrat candidates, granting the party control of Congress. It seems that upcoming President Joe Biden will have better chances of pushing his legislative agenda.

The Georgia election spurred risk appetite. Wall Street soared to records, with the DJIA flirting with an all-time high of 31,000. Also, US Treasury yields surged to levels last seen before the March 2020 pandemic chaos. The yield on the benchmark 10-year note hit 1.05%.

Meanwhile, US President Donald Trump insists on calling the latest election fraudulent and called for new elections. Trump supporters stormed the capitol, invading the building and clashing with the police. Tensions will likely mount during the upcoming hours. Congress activity was suspended. Lawmakers were due to certify the election’s result.

Gold surged to $1,959 a troy ounce, from where it fell towards the 1,900 level. It finally settled at 1,910, as risk appetite weighed on the safe-haven metal.

Crude oil prices kept rallying, boosted by the EIA report which showed a draw of 8.01 million barrels in the week ended Jan 1, better than expected. WTI trades near $ 51.00 a barrel.

Overnight Currency Ranges

AUD/USD: 0.7763 – 0.7819

EUR/USD: 1.2266 – 1.2349

GBP/USD: 1.3536 – 1.3671

USD/JPY:102.68 – 103.44

USD/CAD: 1.2631 – 1.2722

NZD/USD: 0.7258 – 0.7314

AUD/JPY: 79.83 – 80.51

AUD/NZD: 1.0682 –1.0700

AUD Thoughts

We have a lot of data releases today which markets will keep a close on, focus will still remain on Covid headlines, US-China economic relations as well as the ongoing US political developments.

The AUD has gone to another multi-year high 0.7850, currently trading at 0.7795. Appears resting demand is in the 0.7640/50 area coinciding with Monday’s low with further support in the 0.7740 region initially with offers from 0.7815/20.

Event Risk Data Today

AU – November Building Approvals

AU – November Trade Balance

GE – November Factory Orders

EU – November Retail Sales

EU – December Consumer Confidence

EU – December CPI

US – Weekly jobless claims

US – November Trade Balance

US – December ISM Services

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