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Global Market Update
The View from Australia

Craig Killaby January 13, 2021



> NZ December ANZ Commodity Prices : 1.8% v. 0.9% prev.

> JP December Prelim Machine Tool Orders : 8.7% v. 8.6% prev.

> EU November Industrial Production : 2.5% v. 0.2% exp.

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

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


Overnight Headlines (BBG)

> US Congress has urged VP Pence to enact the 25th Amendment to remove Trump from power, although unlikely to have an impact following Pence’s letter earlier in the week backing the President

>Impeachment voting is due to take place in Washington as the tension in the US Capitol remains high with one week left in Trump’s Presidency

What you need to know

The back and forth moves for the USD continues as the Trump Presidency draws closer to an end, with the focus on Washington as the House of Representatives move closer to an impeachment vote. The Dollar regained some of its appeal overnight on haven flows as the political situation in the US remains tense, with most of the gains coming against the commodity pairs with the AUD, NZD and CAD all losing ground on the day.

The data was light in Asia, with the focus on the CPI numbers out of the US, which came in right at market estimates and causing very little movement across markets. The UST 10y yield fell again, down 2.8bps from yesterday’s open. The US also posted a stunning December budget deficit as the debt continues to grow in the US with government seeing a 60.7% increase in the deficit in the first three months of the budget year. Equity markets seeing marginal gains both locally and abroad, with the S&P500 up 0.44% while the ASX posted a marginal 0.10% gain yesterday. Commodity markets had a rough day on the stronger USD, with Iron Ore and Copper down 0.6-0.8%, while WTI crude was unable to catch a bid after posting 11 month highs down 0.4%. Gold continues to consolidate, down 0.1% on the session.

The Day Ahead




> CN December Trade Balance : 466Bio exp.

> EU ECB Monetary Policy meeting Accounts

> US December Import Prices : 0.7% exp.

> US Unemployment Claims : 785K exp.

> US Fed Chair Powell to speak


The focus remains on Washington and the headlines on impeachment, it looks as though the Democrats will run out of time to impeach the President before his term is over, although the calls amongst the Republicans are starting to increase. Chinese trade figures will be the data highlight as the slow data week continues, while ECB meeting minutes will be the highlight during the European session. The Chair of the Fed will be on the docket early tomorrow morning, as commentary on Fed intervention on rising UST yields will be in focus. Range trading expected today with any headlines on impeachment/stimulus in the US likely to move the needle.


Range for the day : 0.7690 – 0.7780


AUD/USD Technicals


0.7780 seems to be an obstacle for the pair on the run towards 0.7820, the recent high. Expecting the pair to trade within the recent range for the remainder of the week with very little data catalysts to move the needle ahead of next week’s inauguration in the US. Breaks lower will be targeting the 0.7660 level, with 0.7625 holding up the pair.