Forex news from the European trading session - 28 January 2021
Headlines:
- Germany reports 17,553 new coronavirus cases, 941 deaths in latest update today
- UK furlough rate reportedly at highest level since July
- Eurozone January final consumer confidence -15.5 vs -15.5 prelim
- China likely to avoid setting 2021 GDP target over debt concerns - report
- There's more to the bump in German inflation this month than meets the eye
- Saxony January CPI +1.0% vs 0.0% y/y prior
- ECB's Rehn: ECB monitoring FX developments very closely
- Germany to prepare entry restrictions for travelers from the UK, Brazil, South Africa
Markets:
- USD leads, AUD lags on the day
- European equities lower; S&P 500 futures flat
- US 10-year yields down 0.5 bps to 1.011%
- Gold down 0.2% to $1,840.92
- WTI down 0.4% to $52.62
- Bitcoin up 1.5% to $31,460
The session started off with the market engulfed by another wave of risk aversion but things calmed down a little mid-way through before much of the negativity is pared back now as we look towards North American trading.
European equities opened lower before extending losses, with the DAX falling by as much as 2% and then trimming declines to just under 1% now.
It was a similar story for US futures, with S&P 500 futures having seen a sharp fall to post roughly 1% losses only to recover to flat levels ahead of US trading.
As the risk aversion abated, the dollar also saw gains trimmed but is keeping a slight advance for the most part with gains more evident against commodity currencies.
EUR/USD kept steadier around the 1.2100 level in general, maintaining a slight decline. Meanwhile, GBP/USD held a steady retreat around 1.3640-60 in general.
USD/JPY kept higher as price action looks poised for a potential breakout, sitting just under its 100-day moving average @ 104.42. However, with Treasury yields keeping more subdued, there are still question marks surrounding such a move.
AUD/USD eased lower from 0.7630 to 0.7592 before holding at some support around the 0.7600 level. And NZD/USD fell from 0.7140 to 0.7106 as price now holds above some near-term support closer to the 0.7100 level for the time being.
Elsewhere, gold and silver trimmed early losses to keep flatter as the market continues to take clues from the shifts in risk sentiment during the session.
Looking ahead, the recovery in the equities space is somewhat encouraging although it isn't quite complete just yet.
Overall sentiment remains more fragile and there needs to be more confirmation from Wall Street to solidify any bounce back and further dip buying. If that does take hold, look towards commodity currencies pulling back up in the session ahead; vice versa.
