Australian Dollar

Two events changed risk appetite overnight with the closely watched German ZEW survey and Janet Yellen’s testimony in Congress supporting the bullish mood on Wall Street as traders returned from the US long weekend.

Asian share markets are no longer unsettled as the realisation that an adult will be in the Oval Office in a few days kicks in the risk spirits with broad gains across most markets and S&P futures looking bright for the return of traders from the US long weekend.

The US long weekend had a deleterious effect on trading volume and hence volatility overnight with most risk markets remaining in stalled mode as they await there queues from Wall Street.

Via Westpac: 1.

Asian share markets remain unsettled after Friday’s fizzer on Wall Street, as the upcoming Biden presidential inaguration later this week is possibly hindering risk taking.

Friday night saw risk markets continue their reversal of confidence as Biden gets closer to taking the presidency and a very large – and taxing (sic) – stimulus package comes forth.

Asian share markets are very unsettled going into the final trading session of the week, with the Biden stimulus plan not landing on the right note for risk takers as higher taxes are definitely on the agenda.

Action on risk markets was muted last night due to the release of the latest jobless claims in the US, followed by the post-close Biden stimulus package announcement, with the former unexpectedly nearly hitting the 1 million mark.

Via ING: USD:Biden’s $2tn plan causes re-steepeningBack-end US yields are back on the rise following a media report that claimedBiden’s pandemic relief stimulus will likely be around $2tn–bigger than what most investors were forecasting–and will include direct payments to families, state and local funding.

Asian share markets are moving higher almost in unison, with Australian shares lagging but finally putting in a decent bid as Japanese stocks head above new decade highs.

It was the return of the king last night – king dollar that is – with yet another reversal in USD due to a very solid US inflation report, with core inflation bang on target while year on year inflation actually ticked higher than expected.

Asian share markets are quite mixed with a big inversion in direction today as Japanese stocks rallied, Chinese bourses dropped while the ASX200 did 2/5ths of nothing again.

Last night saw a solid reversal in USD, blamed in part on the Fed with several speeches by Federal Reserve officials overnight putting a hawkish bent on their position in 2021.

Via ING: USD: Impeachment vote may have somewhat limited impact The dollar has remained generally supported in early trading today as markets await new catalysts in the form of data releases or political developments in the US.

Asian markets are still very hesitant to take on more risk with the return of Japanese markets still not providing any catalyst for more upside, except on mainland China.

Via GaveKal: “Money is the bubble that never pops”, says angel investor and bitcoin enthusiast, Naval Ravikant.

Via JPM: Conviction is certainly waning in the short USD trade and it’s leading to stop outs in the HF community.

The iron ore complex had a wobbly start to the trading week as futures dropped alongside spot prices on Monday, as stockpiles increased for a second consecutive week on easing seasonal demand.

Markets restarted the week with volatility, as hopes and fears over stimulus and 2nd Trump impeachment collided with the USD providing the safe haven of choice.

Some technicals from Credit Suisse: The market has reversed sharply from the key .7816 April 2018 high AUDUSD saw a sharp fall in early trading today back to the 13-day exponential average, currently at .7690, which ideally continues to hold to see the market shift into a high-level range, before the uptrend eventually resumes.

Risk markets are having a mixed start to the week after absorbing the NFP/US Unemployment print on Friday night, with weekend machinations help push down risk spirits somewhat.

Via Goldman: USD: Curve steepening should not change bearish Dollar trend.The broad Dollar rallied to start 2021, following the Georgia election result and the sharp sell-off in longer-dated US rates.

Markets ended a tumultous week with some firm moves higher on Friday night in response to the latest US unemployment data, with commodities moving around the most as stocks lifted firmly into new record highs across Wall Street.