Forex news for North American trade on January 5, 2020:
- ISM December manufacturing index 60.7 vs 56.7 expected
- Saudi Arabia says voluntary cut to amount to 1 mbpd in Feb-March
- OPEC agrees to raise production by 75K bpd in Feb and March
- UK hits 60,000 daily covid cases for the first time
- Fed's Evans: 'Perhaps it is time to revamp regulatory strategies amid low rate environment'
- New Zealand GDT price index +3.9%
- Canada Nov industrial product price -0.6% vs -0.4% prior
- US bankruptcy filings in 2020 were the lowest since 1986
Markets:
- Gold up $6 to $1948
- US 10-year yields up 3 bps to 0.946%
- S&P 500 up 26 points to 3726
- WTI crude oil up $2.40 to $50.03
- AUD leads, USD lags
Once again, the fears and dollar rally disappeared in short order. This is a buy-the-dips equity market and sell-the-rips market in the dollar.
It was a fairly big move, particularly in the antipodeans which posted some healthy bullish outside days to new highs. They even outpaced CAD, despite the help from OPEC. They all hit multi-year extremes in a sign of the positive backdrop in markets.
The ISM manufacturing data was just shy of the best levels since 2004 and that underscored the positive sentiment, as that's when it really took off. Ahead of the equity open, markets were pointing lower but that quickly turned.
The next big hurdle is the Georgia runoff and I shared my thoughts here. It's a tricky one and nothing would surprise me tomorrow. We could also get a sense of the results before the Tokyo close.
Cable made some headway despite the rise in UK cases. I fear a further sharp rise in the next two days, fitting with the weekly pattern. That's going to be another test for GBP where the positive flows from Brexit are competing with negative news on covid.
