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Global Market Update
The View from Australia

Craig Killaby January 18, 2021



> CN Q4 GDP : 6.5% v. 6.2% exp.

> CN December Fixed Asset Investment & Industrial Production : 2.9% & 7.3% v. 3.3% & 6.9% exp.

> CN December Retail Sales & Unemployment Rate : 4.6% & 5.2% v. 5.5% & 5.2% exp.


Overnight Headlines (BBG)

> Incoming US Treasury Sec. Janet Yellen is due to testify to the Senate committee Tuesday, where the comments are expected to show that she is committed to a market dictated exchange rate while pushing for increased spending due to low rates

What you need to know

It was a relatively uneventful trading session in financial markets with the US off in observance of MLK Jr. day, with US equity and bond markets closed for trading. The AUD traded in a tight rage around the 0.7700 handle for the majority of the session, with the main event being the December Chinese data dump, which showed that growth in China has recovered to pre-COVID19 levels as annual growth sits at 2.3%. Overall the data was positive, however the consumer spending numbers dipped in December coming in below market estimates and showing that there are still some concerns. There was a brief move higher in AUDUSD in the aftermath of the data, however it seemed as though risk assets were going to perform softly in holiday-thinned trading with the focus on Joe Biden’s inauguration and the testimony from incoming US Treasury Sec. Yellen this evening.

The Dollar is largely unchanged against the majors, with the AUD and NZD down approx. 0.4% each. AUD crosses are mostly lower on the slight bout of risk aversion, with AUDJPY continuing its slide down another 0.4% on the session. Local equity markets down 0.8% to start the week, while the US markets closed for the holiday. In commodities, WTI crude had a soft open to the week down 0.5% as the lockdowns weighed on the price. While Gold was able to benefit from some of the haven flows, up 0.5% and looking ahead to the inauguration Thursday AEDT.

The Day Ahead




> NZ Q4 NZIER Business Confidence : -40 prev.

> EU December German Final CPI : 0.5% exp.

> EU November Current Account : 28.2Bio exp.

> EU January ZEW Economic Sentiment : 54.1 exp.

> CA November Manufacturing Sales : -0.2% exp.


A very quiet day on the data docket in Asia, with the majority of the day still being a US holiday volumes will return to normal tomorrow ahead of what will be an interesting end to the week. Yellen’s testimony will drive the USD moves overnight, with the focus on the final days of Trump’s Presidency amidst civil unrest and COVID19 surges across the USA. Expecting sideways trading throughout the day, with headlines the main risk as the incoming administration prepares to take over across the Pacific. The move higher in the USD may be a dead cat bounce as investors position for uncertainty in the coming days, although my medium term view of a weaker USD still remains.


Range for the day : 0.7655 – 0.7725


AUD/USD Technicals


With the thin volumes yesterday the pair traded well within its range, as the USD remained in demand ahead of the key risk events ahead. 0.7660 seems to be holding up yet again, with a break of that level leaving the door open to a move back towards the 0.7625 level. Resistance still seen at 0.7740, while 0.7800/20 still needs to be broken to see another jolt higher.