8th January 2021- Modest dollar’s gains as Wall Street keeps rallying

Updated: Feb 3, 2021

Good Morning,

Market Headlines

The dollar continued advancing on Thursday, but pared gains mid-US session and gave up some ground. Despite its recent gains, the greenback remains the weakest currency across the board. Wall Street extended its latest rally, with the three major indexes posting intraday gains and reaching fresh all-time highs. US Treasury yields kept advancing with the yield on the benchmark 10-year note topping 1.09%.

Markets are still hopeful about an economic comeback in the second half of the year, amid coronavirus immunization. Vaccination started on a bumpy fashion, but its slowly extending globally. Monetary and fiscal stimulus underpin high-yielding assets.

Financial markets ignored US political turmoil. Things cooled down a bit on Thursday and the Senate finally validated Joe Biden’s victory. Still, Democrats want US President Trump out of the White House as soon as possible, despite he has only 13 days left at the office. The drama will continue but it seems transition will take place as scheduled next Jan 20.

Overnight Currency Ranges

AUD/USD: 0.7726 – 0.7793

EUR/USD: 1.2245 – 1.2325

GBP/USD: 1.3533 – 1.3625

USD/JPY: 103.19 – 103.95

USD/CAD: 1.2673 – 1.2733

NZD/USD: 0.7226 – 0.7285

AUD/JPY: 80.13 – 80.58

AUD/NZD: 1.0679 –1.0700

AUD Thoughts

The AUD appears to have topped out around the 0.7820 mark, which is where we’d expect to see resting offers lay. Whilst there is nothing to stop the AUD moving higher, it’ll be interesting to see if that level is a roadblock or a speedbump on what seems like an inevitable move to 0.8000.

Overnight trade saw us down to a 0.7726 low, so we expect the support to be staggered in from 0.7735 and then again sub 0.7680

Event Risk Data Today

GE – November Trade balance

GE – November Industrial Production

EU – November unemployment rate

US – December employment report

US – November Wholesale Inventories

CA – December employment report

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