Forex news from the European trading session - 4 January 2021
Headlines:
- Germany reportedly plans to extend lockdown until 31 January
- ECB's de Cos: We can use full PEPP envelope or increase it if required
- Bitcoin plunges back under $30,000
- Tokyo asks residents to refrain from non-urgent, non-essential outings after 8pm local time
- UK November mortgage approvals 105.0k vs 83.5k expected
- UK December final manufacturing PMI 57.5 vs 57.3 prelim
- Japan could make state of emergency announcement as soon as Thursday - report
- SNB total sight deposits w.e. 1 January CHF 702.7 bn vs CHF 703.9 bn prior
- Eurozone December final manufacturing PMI 55.2 vs 55.5 prelim
- Bangkok orders early closure of restaurants amid record daily virus cases
- Germany reports 9,847 new coronavirus cases in latest update today
Markets:
- CHF leads, GBP lags on the day
- European equities higher; E-minis up 0.4%
- US 10-year yields up 1.2 bps to 0.925%
- Gold up 1.9% to $1,934.20
- WTI down 0.4% to $48.30
- Bitcoin down 6.4% to $30,098
Welcome to 2021! It is a brand new year but same old story in the market, as equities kick things off with a modest rally while the dollar slumps across the board.
This is arguably a precursor of what to expect from the market for the most part in the first quarter/half of the year, as long as things keep as they are currently.
Among the big winners today, precious metals also deserve a shout with silver up by over 3% to $27.25 while gold is up near 2% to $1,934 levels at the moment.
The gains there are in part helped by dollar weakness, which is particularly evident to start the new year as the greenback slumps across the board.
USD/JPY is dragged to its lowest levels since March last year below 103.00 while EUR/USD gained from 1.2250 to test 1.2300 during the session.
The pound is a notable loser as it struggles to stay afloat as the 'sell the fact' play starts to come around after the Brexit deal just before Christmas.
Cable is little changed but down from 1.3700 as the dollar struggles but sterling weakness is more evident elsewhere, especially EUR/GBP trading back to test 0.9000.
Commodity currencies also stuck with a modest bid against the greenback but gains are less emphatic for the most part. AUD/USD moved higher from 0.7705 to 0.7740 only to ease back to 0.7720 now as we look towards North American trading.
European stocks kept a solid advance throughout the session, with UK stocks in particular rising sharply on its first trading day outside the EU.
It seems like not much has changed as we look to get things going in the new year. We're pretty much picking up from where 2020 left off but there will be a couple of things that investors will have to be mindful about in trading later this week.
The Georgia runoffs will be one of the first key risk events tomorrow before we get to the rather defunct US non-farm payrolls on Friday.
In the meantime, it'll mostly all be about virus news with some focus on the $2,000 stimulus checks - which will surely be blocked no matter how the details change.
