The US dollar fell versus most of its peers during the Tuesday, January 12 trading sessions. The dollar index (DXY) gave back most of the gains recorded so far during 2021 to end the day trading -0.39% down but up 0.21% year-to-date.
In a negatively correlated trading pattern, cable (GBP/USD) traded up 0.91% as the UK FTSE 100 index sold off, finally closing the day out down -0.65%. The primary currency pair traded in a wide bullish range during the day’s session, breaching R2 and printing an intraday high of 1.3653, just shy of the 1.3700 level-handle, a two-year high breached in last week’s trading sessions.
We’re not necessarily witnessing GBP strength returning to currency markets but US dollar weakness continuing across the board. Versus several other peers, GBP has slumped year on year as the Brexit issues created a lack of confidence in investors.
EUR/GBP closes in on the 50, 100 DMA death cross
EUR/GBP is close to flat year-to-date after recording gains of approximately 6.5% during 2020. On Tuesday EUR/GBP slumped through S2 while trading -0.67% down on the day. The 50 DMA and 100 DMA are close to creating a death cross; a pattern formed when two large moving averages cross on a daily chart. EUR/USD traded in a tight range on Tuesday, oscillating between the daily pivot point and R1, and registering gains of 0.36%.
USD slides versus yen and the Swiss franc
USD/CHF sold off during the latter part of the New York session after various Fed officials reaffirmed the highly accommodative, monetary policy narrative developed over recent weeks. The pair traded -0.31% down while threatening to breach S1.
USD/JPY also sold off quickly towards the end of the NY session, -0.32% down while falling through the 104.00 level/handle. USD/JPY is trading close to the 50-day moving average sited at 104.013 when plotted on a daily timeframe.
Both AUD and NZD recorded significant gains versus USD on the day, AUD/USD trading 0.77% up and NZD/USD 0.59% up. Both antipodean commodity currencies are sensitive to any oil price increase, and crude oil traded 1.67% up on the day, and 9.48% up year-to-date at over $53 a barrel.
Gold arrested its recent slump, closing out the day 0.55% up, while silver registered considerable gains closing 2.69% up on the day. Although the precious metals have fallen during the first two trading weeks of 2021, both assets closed out 2020 with significant gains.
US equity indices trade in narrow ranges
The latest job openings data for the US (JOLTS) provided few clues regarding the US labour force’s direction. The number came in at 6.5 million in December, a fall of five thousand, still below the pre-pandemic readings of approximately 7 million each month.
Nevertheless, the net sixty-seven thousand new hires taken on in the month provides reason for optimism in the current COVID-19 situation. We’ll need the seasonal job-hire data taken out of the frame to analyse US jobs metrics better. Especially after the shock net loss of -175K jobs in December according to last Friday’s NFP reading.
Equity markets trade in tight ranges, while awaiting Trump’s fate
US equity markets failed to react despite the bullish news that 1.25 million COVID-19 vaccines were administered on Monday, taking the total to 9.27 million, close on 380K adults received their second jabs.
Washington’s ongoing politics tempered market optimism and bullish sentiment, as Congress attempts to remove Trump from office early. Either by invoking the 25th amendment or voting for impeachment, again.
At 8:30 pm UK time on January 1 the SPX 500 traded 0.10% up, the DJIA 30 was 0.24% up, and the NASDAQ 100 was close to flat. Tesla recovered most of the losses recorded the day before, trading up 5.84%, while other popular tech shares were mostly down.
Economic calendar events to monitor closely on Wednesday, January 13
The London session focuses on the industrial production figures for the Eurozone. The forecast is a reading of 0.3% for November, falling from October’s reading of 2.1%. The result might cause the euro to react.
The New York trading session may be affected by the USA’s latest inflation figures, monthly and annually. Reuters forecast an unchanged reading of 1.2% year on year. The price of USD could come under scrutiny if the reading misses or beats the forecast. Oil and gas stockpile figures will be published, and Fed official Mr Brainard will deliver an economic policy update. At 7 pm UK time on Wednesday, the latest US monthly budget figures are forecast to reveal a significant improvement; from -$145B in November, to -$82B in December, a result that could positively impact the value of USD versus its peers.