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Global Market Update
The View from Australia

Craig Killaby January 12, 2021



> JP November Current Account : 2.34T v. 2.00T exp.

> US November JOLTS Job Openings : 6.53M v. 6.42M exp.


Overnight Headlines (BBG)

> UK BOE Gov. Bailey commented that there may be issues with implementing negative rates

>US VP Pence stated that he plans to work with the President in his final days in office as impeachment articles are discussed in Congress

What you need to know

The move higher in the USD did not last long as large option expiries and moves higher in the GBP saw the Buck retreat off of its recent highs. Moves yesterday were very muted during the majority of the Asian session, with the Aussie trading in a tight range before briefly breaking below 0.7700 later in the day posting a low of 0.7687. FX market moves have been dictated by the back and forth on the USD, with the DXY opening up this morning down 0.3% with both the EUR and GBP seeing gains. The Aussie opens up looking strong and poised to make another run at the 0.7800 handle, with the comments from the Bank of England’s Gov. on negative rates putting the USD on the back foot heading into today’s trade. Bond yields in the US moving lower every so slightly, with the 10y yield down a touch and assisting in the USD’s reprieve after rising 2bp on earlier in the US session. Main moves of the session came in commodities, with the price of WTI crude hitting an 11-month high and continuing its rebound from negative levels seen in April 2020 up 1.6% on the day. Both Iron Ore and Copper up nicely on the day, while even the price of Gold stopped its slide up 0.4%.

The Day Ahead




> NZ December ANZ Commodity Prices : 0.9% prev.

> JP December Prelim Machine Tool Orders : 8.6% prev.

> EU ECB President Lagarde to speak

> EU November Industrial Production : 0.2% exp.

> US December CPI & Core CPI : 0.4% & 0.1% exp.

> US EIA Crude Oil Inventories : -3.2M exp.


It continues to be the same culprits driving markets, with the unlikelihood of impeachment to have an impact on the President’s final days the focus now shits to stimulus with Biden due to unveil his details on Friday AEDT. Today is likely to be very quiet in Asia, with headlines remaining the risk as any sort of real traction on political tensions may seeing a slight risk-off scenario although unlikely to have a real impact. Data tonight will be highlighted by consumer inflation numbers out of the US, with a continued rise in longer term inflation expectations a significant increase may see investors worry about the inflationary pressures.


Range for the day : 0.7720 – 0.7800


AUD/USD Technicals


The 0.7700 handle looks to be holding up quite well for the pair as the USD weakness sees the rally regain steam back towards 0.7800. Support still seen at the ExpMA200 at 0.7722, with resistance seen at the psychological 0.7800/0.7820 levels amidst the pullback in the USD.