The British monthly GDP is announced on Friday at 09:00 MT time.
USD gets stronger due to new virus strain
- The market sentiment deteriorated as the new Covid-19 variant engulfed the UK. Other countries closed their borders to stop the virus spread. As a result, riskier assets such as S&P 500, oil, the AUD, the NZD dropped.
- As for the US stimulus package, the process has almost ended. The last step is the signature of Donald Trump, and a $900 billion US pandemic relief package will be unveiled. That should underpin stocks and improve the market sentiment, but “will do little to accelerate the arrival of an economic recovery,” said JPMorgan.
- The pound is weakening amid the Brexit talks and the new lockdown in the UK. Travel bans to contain the new coronavirus variant also deteriorated the market sentiment. However, officials claim that the existing Covid-19 vaccines should provide protection against the new virus strain as well.
- All eyes on the final US GDP at 15:30 MT time and the US consumer confidence at 17:00 MT time.
The most traded pair dropped enormously yesterday, but the 50-period moving average stopped it from further falling one more time. If the pair tumbles below the psychological mark of 1.2200, the way down to the 50-MA at 1.2180 will be open. However, the pair shouldn’t cross this strong support as it has failed to do it so far, that’s why we can expect the pullback to the upside. Resistance levels are 1.2240 and 1.2270.
GBP/USD is still trading in a descending channel despite all the headwinds. Now it’s trading sideways near the key psychological mark of 1.3400. If it jumps above yesterday’s high of 1.3450, the way up to the next resistance of 1.3500 will be open. In the opposite scenario, if it drops below the 200-hour moving average of 1.3300, it may drop to the next support of 1.3200.
XAU/USD is moving in a descending channel. It touched the intersection of the top of its range and the 100-period MA near $1 915, therefore the way up was closed, and the price went down. If it breaks through yesterday’s low of $1 860, it may fall to the low of December 14 at $1 825. Resistance levels are $1 890 and $1 915.
Oil dropped after the new virus variant had been found in the UK. It has approached the key support of $46.50. It’s unlikely to break this level by the first attempt as it has failed to cross this level several times this month already. Besides, the 100-period MA lays at the same level, which should limit the further falling as well. If it manages to break it, the doors will be open to the low levels of early December at $45.50. To trade WTI oil with FBS, you need WTI-21G, which expires on January 19.
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.