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.
Stocks surged after Trump left hospital
The US president is back to White House after three days spent in the hospital. Riskier assets rose, while safe havens dipped.
- All attention to Trump’s fast recovery from Covid-19. His return back to work has improved the market sentiment.
- Besides, escalating new virus cases and also Trump being part of that increased chances for the launch of a fiscal stimulus package. When officials finally unveil it, it should boost the sentiment even more.
- Elsewhere, national polls have pointed to the victory of Joe Biden. As people see the clear winner, they stopped being afraid of a close election, and also aggressive and cut-throat competition.
- US ISM Services PMI came out better than analysts expected: 57.8 vs. the forecast of 56.3.
- The Reserve Bank of Australia has left interest rates and yield target unchanged. According to Capital Economics, the RBA’s statement “sounded dovish and left the door open for additional stimulus”.
- Chinese people enjoy the vacation, named the Golden Week. Whereas the whole world is engulfed with the fresh virus outbreak, China has taken infections under control and has shown a steady economic rebound.
EUR/USD has beautifully bounced off the 23.6% Fibonacci level at 1.17050 and rallied to 1.1800, but failed to cross this level. If it manages to break through it, it may rise to the 50.0% Fibonacci level of 1.1810 and then to 61.8% Fibo level of 1.1860. In the opposite scenario, the move below the 38.2% Fibo level of 1.17640 will drive the pair back to 1.17050.
S&P 500 is edging higher amid the overall risk-on sentiment. The move above the high of September 16 at 3 420 will push the stock index upwards to 3 480. On the flip side, the move below the 100-period moving average of 3 330 will push the price lower to September’s low of 3 205.
The Australian dollar has reversed from the key resistance of 0.7210 at the 50.0% Fibo level. If it crosses the 38.2% Fibo level of 0.7160, it will fall deeper to Friday’s low of 0.7140. In the opposite scenario, if the aussie manages to break the 50.0% level, it will jump to 0.7260, as the current risk-on mood may help it to climb up.
Finally, let’s talk about XAU/USD. It has been trading in the ascending channel. The move above yesterday’s high of $1 920 will push the price the 200-period moving average at $1 926. Otherwise, if the risky mood weighs further on the precious metal and it drops below the recent low of $1 890, the doors to $1 880 will be open.
- Australian Annual Budget will be published at 11:30 MT time.
- ECB’s President Lagarde will speak 5 minutes later.
- The Canadian Trade Balance will be out at 15:30 MT time.
- Fed’s Powell will deliver a report at 17:40 MT time.
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.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.