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.
USD: fighting through
There is definitely a positive dynamic in the labor market based on the figures announced by the labor authorities in the US this Thursday.
5.2mln people filing for unemployment benefits is certainly better than 6.6mln and 6.8mln as it was it the previous two weeks respectively. However, the figure was still slightly above the expected 5.1mln.
How did the USD react? Relatively indifferently across the board, although a certain weakness is visible with USD/JPY as in the chart below.
Generally, the USD has stopped its advanced against other currencies leading the main currency pairs into a temporary consolidation to digest the incoming data. In the larger scheme, it is unlikely, however, that the investors will move away from demanding more US dollars to hedge against the virus damage.
For the USD/JPY specifically, it trades currenly at 107.46 testing the support of 100-MA at 107.38. In fact, the currency pair performance is now contained between the latter and teh resistance of 200-MA at 107.68. Crossing either of these will serve as a confirmation of further direction for this currency pair.
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.