The British monthly GDP is announced on Friday at 09:00 MT time.
US debates deteriorated sentiment
Yesterday Donald Trump and Joe Biden had intense debates. The market reaction was initially positive, which drove stocks higher. However, after that Trump claimed he would refuse to accept election results in case of Biden’s victory. As a result, the overall sentiment deteriorated and pushed stocks to the downside.
S&P 500 has bounced off the key resistance of 3 350. If it manages to cross the low of September 24 at 3 200, it may dip to the 200-day moving average at 3 100. Resistance levels are 3 350 and 3 400.
Elsewhere, US CB Consumer Confidence came out 101.80, exceeding market expectations of 90.0. That added some tailwinds to the greenback. EUR/USD has just failed to cross the significant resistance of 1.1750. If it retests it again, the way towards Tuesday’s high of 1.1770 will be open. In the opposite scenario, the move below the low of 1.1700 will drive the price to yesterday’s low of 1.1675.
Chinese Manufacturing PMI was released early in the morning and was almost as planned: 51.5 vs. expected 51.3. That indicated the steady recovery in the world’s second largest economy. It wasn’t enough to drive the Chinese yuan as well as the Australian dollar upwards amid the strong US dollar. If AUD/USD jumps above the 50-day moving average at 0.7200, the way to high levels of early August at 0.7245 will be open. Support levels are 0.7000 and 0.6920.
As for the UK, Brexit talks continue. In addition, the UK GDP came out better than analysts anticipated: -19.8 vs. the forecast of -20.4. However, the British pound is loosening against the dollar. GBP/USD is unlikely to fall below the strong support at the 200-day moving average at 1.2720. The move above the 50-day moving average at 1.3000 will drive the pair to 1.3250.
Finally, let’s discuss gold. It has started recovering after the dramatic slump, but then failed to break through the key resistance of $1 900. The move below yesterday’s low of $1 880 will push the pair lower to the next support of $1 850. On the flip side, if it manages to jump above $1 900, the doors towards the 100-day moving average at $1 920 will be open.
The economic calendar is full of releases today. ADP will be out at 15:15 MT time and will give some hints ahead of Friday’s NFP. Later on, Canadian and US GDP will come out. Stay tuned!
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.
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.