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Global Market Update
The View from Australia

Craig Killaby January 17, 2021



> UK November Industrial Production : -0.1% v. 0.5% exp.

> UK November Manufacturing Production : 0.7% v. 1.0% exp.

> US December Core Retail Sales & Retail Sales : -1.4% & -0.7% v. -0.1% & 0.0% exp.

> US December Core PPI & PPI : 0.1% & 0.3% v. 0.1% & 0.4% exp.

> US January Empire State Manufacturing Index : 3.5 v. 5.7 exp.

> US January Prelim UoM Consumer Sentiment : 79.2 v. 79.5 exp.


Weekend Headlines (BBG)

> President-Elect Biden’s stimulus plan was unveiled on Friday AEDT, including approx. US$1.9trillion worth of fiscal aide to assist those struggling due to the COVID19 shutdowns

>UK will shut its borders with the rest of the world amidst a worrying increase in COVID19 cases as the more contagious strain is seeing a major uptick in case loads

>Vaccine rollouts took a hit as Pfizer announced that it will not be on schedule to fulfill all orders of its vaccine over the next month, seeing risk appetite take a hit

What you need to know

It seems as though investors chose to take profits on their short Dollar positions heading into the US long weekend as the USD gained near 0.6% following the announcement of Biden’s stimulus package. The initial market reaction during the Asian session on Friday was muted following the announcement, which will be a large US$1.9trillion targeted package focused on those struggling due to the shutdowns and including $1400 checks to Americans. Havens were bought later in the day as investors positioned for the extra day off today due to the Martin Luther King Jr. holiday, and looked ahead to the inauguration on the 20th January.

The AUD and NZD were two of the worst performers of the session, with the Aussie touching a low of 0.7683 on the day while the NZD is down 1.2% this morning. The AUD crosses are all looking a touch softer on this week’s open, with AUDJPY the biggest loser down 1% as the JPY strengthened on haven flows. Data out of the US continued to show the impact that the surge in COVID19 cases is having on the economy, with retail figures coming in very soft on both the headline and core numbers as the US went back into a strict lockdown. US equity markets were down 1.2% on Friday, as investors placed bets that the stimulus plan is likely to run into significant opposition in congress and general risk off flows. Commodity markets had a tough session, with most indexes down substantially on the session with WTI crude down 2.3% while even Gold was unable to catch a bid on haven flows down 1%.

The Day Ahead




> CN Q4 GDP : 6.2% exp.

> CN December Fixed Asset Investment & Industrial Production : 3.3% & 6.9% exp.

> CN December Retail Sales & Unemployment Rate : 5.5% & 5.2% exp.

> US Bank Holiday – Martin Luther King Jr. Day

> UK BOE Gov. Bailey to speak


Volumes are expected to be lighter than usual with the US off in observance of MLK Jr. Day, while the focus in Asia will be on the Chinese data dump including their Q4 GDP numbers. Expecting to see strong numbers out of China as they continue to rebound from the trough of the pandemic, however the focus for the week will be on the back end with the final day of the Trump Presidency likely to see some curveballs. The inauguration later on in the week may see some trimming of positions, with Biden’s first days in office expected to be accompanied by a wave of executive order overturning some of those implemented by Trump. Central banks and political risks will be the focus on at the end of the week, with the Fed’s decision next week being eyed closely.


Range for the day : 0.7660 – 0.7740


AUD/USD Technicals


There was a brief pause in the rally up towards the 0.7800 handle, with 0.7820 still the important level to watch on moves higher as investors weigh up the medium term prospects of the USD. The pair is likely to run into support at 0.7640 while a break of the YTD high will likely see 0.7917 as the next major obstacle.