The US dollar’s weakness offered a boost to emerging-market currencies and oil.
Daily News: a big day for Central Banks
- A day will be full of speeches of central banks’ Kings! Mr. Lowe, the Governor of the Reserve Bank of Australia, Mr. Draghi, the President of the European Central Bank, Mr. Kuroda, the Governor of the Bank of Japan, and Mr. Powell, the Chairman of the Federal Reserve will participate in a panel discussion at the European Central Bank Forum on Central Banking, in Portugal (16:30 MT time). Let’s see what new they are ready to present.
Author of the picture: Alexandros Michailidis / Shutterstock.com
- On Tuesday, the US dollar index managed to close above the psychological level at $95, as a result, it is going up today. Today traders will look at current account (15:30 MT time) and existing home sales (17:00 MT time) data. The forecast is mixed, so if the actual data are greater than anticipated, the index will go higher. Moreover, Mr. Powell will give a speech at 16:30 MT time. If he sounds optimistic, the USD will appreciate more. The resistance is at $95.40.
- Some threats for the Chinese yuan. According to the Wall Street Journal, “If the U.S. goes ahead with tariffs, China would need to consider some of the more aggressive options. Letting the yuan weaken becomes something that logically the Chinese would consider.” Let’s have a look at the chart. USD/CNH is growing since June 14 when Mr. Trump announced additional tariffs on Chines goods. The pair is trading at highs of January 2018. If Mr. Trump imposes new tariffs he announced just yesterday, the pair will move even higher.
- The oil market is trying to recover. Today crude oil inventories data will be released at 17:30 MT time. The forecast is not encouraging for oil as the decline in a number of barrels will be less than last week. However, the data from the private survey of the US Energy Information Administration showed a bigger decline than anticipated. As a result, up to now, Brent and WTI are going up. If the official data shows a greater decline as well, the further rise is anticipated. However, if the decline is less than anticipated or even there is a surplus, both oil benchmarks will go down.
WTI is above the pivot point at $65.25, however, 100-day MA is weighing on it. If data is encouraging for the oil market, WTI will move to the resistance at $66.20. Otherwise, it will go down to $63.30.
Brent is moving up as well. The oil benchmark tested the resistance at $75.70. However, 50-day MA is putting pressure on it. If data is encouraging, Brent will be able to break the resistance, otherwise, it will return to the support at $74.35.
- Oil is rising, as a result, USD/CAD doesn’t have enough strength to rise. The pair couldn’t break the resistance at 1.33. The further movement will depend on the strengthening dollar and oil data. If they are not encouraging for the Canadian dollar, the pair will be able to break the resistance and move further to 1.3380. Otherwise, the pair will turn around and will move to 1.3120.
- No significant changes in directions of other currencies.
That is all for today. Follow markets’ news with us!
The main market tendency today is that the US dollar is rising against its major peers and riskier assets such as stocks and oil are plummeting.
The US unemployment claims are out on Thursday at 15:30 MT time.
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.