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The dollar is holding slightly firmer ahead of European morning trade alongside the yen, as risk is tilted a little towards the softer side for the time being.
Biden's $1.9 trillion proposal failed to light the market up and there are hints of disappointment to that, with concerns that some of the planned spending will struggle to gather bipartisan support in Congress moving forward.
That is pinning equities lower, with US futures seen down 0.5%. Meanwhile, Treasury yields are also on the retreat with 10-year yields down to 2.7 bps to 1.102% now.
The modest advance in the dollar could still switch up later in the day and the more telling reaction will come when Wall Street enters the fray ahead of the weekend.
EUR/USD is keeping lower with daily support seen closer to the 21 December low @ 1.2129. Meanwhile, AUD/USD is nudging closer towards its key hourly moving averages @ 0.7739-49 once again ahead of European trading.
GBP/USD is still seeing its advance capped at 1.3700 while USD/JPY struggles to keep the upside momentum as yields slip, trading back below 104.00 but holding above its 200-hour moving average @ 103.65 for the time being.
In the commodities space, gold is up slightly to $1,850 as buyers continue to hold a defense of the 200-day moving average but are still doing battle around its 100-hour moving average near $1,849 in order to seize back some near-term control.
I'd argue that any significant dollar advance from the disappointment here should be faded all things considered. More stimulus will follow under Biden eventually and while it may not be the "trillions" promised, it still does bolster the recovery narrative.
Instead, I want to say that Fed chair Powell's remarks yesterday should hold more of a candle to what to expect in the market this year. While that hasn't quite reverberated just yet, it should retain the big picture view in the market through 1H 2021 at least.
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