Forex news from the European trading session - 27 January 2021
Headlines:
- US MBA mortgage applications w.e. 22 January -4.1% vs -1.9% prior
- Melvin Capital reportedly closes out its GameStop position
- ECB's Knot: ECB has tools to counter euro appreciation if needed
- Switzerland January Credit Suisse investor sentiment 43.2 vs 46.8 prior
- Germany February GfK consumer confidence -15.6 vs -7.9 expected
- Germany reports 13,202 new coronavirus cases, 982 deaths in latest update today
- BOJ Gov Kuroda says the bank's buying of ETFs helps support the economy
Markets:
- USD leads, AUD lags on the day
- European equities lower; S&P 500 futures down 1.0%
- US 10-year yields down 1.4 bps to 1.02%
- Gold down 0.5% to $1,842.00
- WTI up 0.1% to $52.68
- Bitcoin down 3.8% to $30,806
It was a relatively lackluster session to start things off but things quickly picked up mid-way through, with the dollar pushing higher across the board as equities turned sour.
European indices opened with slight losses but accelerated its decline alongside US futures, as the market positions itself more cautiously ahead of the Fed today.
S&P 500 futures were flat early on but are now trading down by 1%, while Nasdaq futures were up by roughly 0.4% in the early stages only to trade lower now as well.
The risk aversion in the market is keeping a bid in the dollar as such, with the greenback also picking up some slight gains from ECB Knot's remarks on quelling euro strength.
EUR/USD eased from 1.2135 to 1.2120 initially but is creeping lower towards some near-term support at around 1.2110-18 currently. GBP/USD also trimmed its overnight gains in a drop from 1.3730 to 1.3700 as the dollar firmed.
Commodity currencies are the laggards considering the softer risk mood, with AUD/USD easing from 0.7740 to 0.7700 and creeping below its key hourly moving averages.
NZD/USD is also tracking lower from 0.7230 levels to 0.7205, nearing a test of its 100-hour moving average close to the 0.7200 handle.
Elsewhere, gold and silver also dropped on the back of the strength in the dollar with the former easing from $1,850 to $1,837 before settling around $1,842.
All eyes stay on the Fed as the market searches for more answers on the week and while Powell & co. may yet offer a timely reminder that the Fed put is still well and truly in play, the delivery of that message will be equally as important for sentiment.
It is also a big day for earnings releases as we will be seeing Apple, Tesla, and Facebook report after the market close today.
