Thursday January 14th, 2021

A full day of news with Impeachment, US stimulus, Fed speech’s and US jobless claims data. The US$ & Oil prices stall while Treasury yields, and equity markets strengthen on the prospect of US$ 2tln in covid-relief stimulus. According to reports President Elect Biden is set to announce his stimulus plans in a speech today. The US President has been impeached by the House of Representatives for a 2nd time in a vote 232 to 197 in favour of impeachment. The US wont ban investments in Alibaba, Tencent & Baidu, but 9 other Chinese companies will be added to the Pentagons Chinese military companies list. Markets will focus on the Fed Reserve Chair speech today for signals on future bond buying, US yields and US$ direction.  Strong Chinese trade surplus results for December helped CNY & Asian currencies strengthen 0.1% on average vs US$. Trading currencies were mixed with JPY & NOK down 0.15% while MXN up 0.35%, AUD & NZD up 0.45% and ZAR rallied 0.8% vs US$. Markets will also be focusing on US Jobless claims data out this morning for direction.

Oil prices dip as pandemic concerns outweigh positive Chinese data and falling US crude inventory. Demand concerns return as many countries extend lockdown restrictions and China reports the most covid-19 cases in more than 10 months. C$ extended gains on Wednesday as the US$ and Treasury yields eased, while oil prices stalled. France objects to Couche-Tard’s 20 bln Carrefour bid, but analysts believe the takeover could still proceed. US treasury yields rise this morning alongside US stimulus expectations, this could see US$ rebound and put pressure on C$.  Support holds at 1.2665, if breached look for 1.2626 with resistance at 1.2735.

Euro holds steady around 1.2150 vs US$ ahead ECB Lagarde’s speech. The ECB meeting minutes will be released this morning, but in comments yesterday Lagarde said uncertainty is now lower after Brexit. We believe Lagarde is adopting a moderate tone to avoid boosting EUR, which will assist the EU in the current economic conditions. Focus will shift to the US data, the FED comments and President Elect Biden speech for intraday direction. Support at 1.2080 and resistance holds at 1.2205.

GBP returns to 1.3650 vs US$ but markets remain cautious ahead of US data, US stimulus & the Fed Chairs speech. GBP is finding support from the UK vaccinations efforts which has seen 4.52% of the population receiving vaccinations, the highest in the western world. Intraday direction will be driven from the US as markets await direction for US$, US yields and US stimulus proposals. Support holds 1.3600, with resistance 1.3705 (2021 peak).