Forex news for North American trade on January 20, 2021:
- Joe Biden sworn in as President of the United States
- Bank of Canada holds rates and boosts outlook
- BOC's Macklem: Too early to consider slowing QE pace
- Macklem Q&A: Adjusting QE process will be a gradual process
- NAHB US housing market index 83 vs 86 expected
- New Zealand Westpac Q4 employment confidence index 97.6 vs 87.4 prior
- Canada December Teranet house price index +0.6% m/m vs +0.9% prior
- Canada December CPI +0.7% y/y vs +1.0% expected
- Italy approves extra deficit spending up to 32B euros
- US sells 20-year notes at 1.657% vs 1.643% WI
- Sen Romney says not looking for new stimulus in the immediate future
- BOE's Bailey: GDP was about 10% lower than pre-covid in September
- China sanctions Trump administration figures including Pompeo
- Sunak plans extension of pandemic job support measures
- Trump says 'remember me' and repeatedly mentions stock market high
- Trump departs the White House for the last time
Markets:
- Gold up $30 to $1870
- US 10-year yields down 1 bps to 1.08%
- S&P 500 up 53 points to record 3851
- WTI crude up 26-cents to $53.24
- CAD leads, EUR lags
The US equity market greeted Biden with a big gain today, led by big cap tech after the strong earnings report from Netflix late yesterday.
In FX, there was chatter about a BOC micro cut or some other kind of stimulus but there was nothing of the kind with forecasts for inflation and GDP mostly boosted higher. That led to a quick drop in USD/CAD to 1.2606 from 1.2700 but that was tough to disentangle from a broad USD drop at the same time as risk assets improved.
Later, as risk assets continued to rise the dollar recovered about half its losses then the FX market went a bit flat.
Late in there was some small USD selling, especially in USD/JPY as yields turned lower despite the big tail in today's auction. Cable is also perking up as I write.
The euro was a laggard with most expecting Lagarde to do everything she can to jawbone the euro lower. I don't think she's going to get much traction with that kind of talk but that's the state of play heading into the ECB.
AUD/USD also posted a strong day ahead of the jobs report at 0030 GMT.
