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Global Market Update
The View from Australia

Craig Killaby January 14, 2021



> CN December Trade Balance : 517Bio v. 466Bio exp.

> US December Import Prices : 0.9% v. 0.7% exp.

> US Unemployment Claims : 965K v. 785K exp.


Overnight Headlines (BBG)

> Markets await details on the next US stimulus package, with is said to be in the area of US$2trillion to assist the economy that is crumbling with the devastating impact of the COVID19 induced lockdowns

>US Fed Chair Powell reiterated that US rates are not increasing anytime soon, with a significantly worrying sign of inflation the only cause to raise in the medium term

What you need to know

Financial markets are in wait and see mode as incoming President Biden is due to provide details on the new proposed stimulus package at some point today. The Asian session was relatively quiet, with headlines still the major driver amidst Trump’s impeachment in the House of Representatives and the news of the size of the next fiscal support package. Chinese trade figures showed that their recovery continues as they posted a large surplus in December as the world still struggles to cope with the virus lockdowns and the impact on domestic production. Commodity backed pairs are looking stronger yet again, with bets being placed that Biden’s package today will have heavy buying of resources for infrastructure spending to drag the US out of what will be a very dark winter as COVID19 deaths hit record highs in the country and unemployment claims climbed the most since March. US Fed Chair Powell signaled that the central bank is going to continue its immense support efforts for the economy, while signaling that the bond buying program and low interest rates are here to stay. Bond markets saw a further selloff as yields rose across the UST curve. Equity markets locally were up on the day, with the ASX gaining 0.4% while the S&P500 pared gains later in the session down 0.15% at the time of writing. Gold the laggard in commodities, with Iron Ore surging over 2.7% while Copper is up 1.5%. WTI crude continues to march higher, up 1.5% as inflationary pressures continue to send signals that they are on its way.

The Day Ahead




> US President Elect Biden to speak

> UK November Industrial Production : 0.5% exp.

> UK November Manufacturing Production : 1.0% exp.

> US December Core Retail Sales & Retail Sales : -0.1% & 0.0% exp.

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

> US January Empire State Manufacturing Index : 5.7 exp.

> US January Prelim UoM Consumer Sentiment : 79.5 exp.


The speech from President Elect Biden will set the table for the session, with the blue wave coming to fruition and Biden to take office next week, markets are poised for a strong move higher in risk. It is key to look past the headlines on impeachment, with nothing likely to come from the token process in the House of Reps. Data will be focused on the retail numbers for the US this evening, with soft figures expected as the lockdowns intensified in December in what usually is a strong month for the retail sector with the Christmas holidays. Producer inflation and consumer sentiment will also hit the wires, however markets are likely to look ahead to next week and the inauguration on the 20th January.


Range for the day : 0.7740 – 0.7820


AUD/USD Technicals


Although able to post a weekly high of 0.7805 overnight, there seems to be some selling pressure above the 0.7800 handle as investors take profits at the highs. Stimulus news will dictate the range today, however 0.7820 still remains the key on moves higher while the weekly low of 0.7666 will be the target on a disappointment.