December 30, 2020
- Vaccine roll-outs trumps fears of new COVID-19 strain in US
- US Stimulus bill lost in translation
- US dollar extends yesterdays losses
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: Portfolio rebalancing flows for month and year-end fueled US dollar selling overnight. As is usually the case at this time of year, poor liquidity exacerbated the price swings.
Asia equity indexes closed on a mixed note. Hong Kong’s Hang Seng soared 2.18%, while Japan’s Nikkei 225, and Australia’s ASX 200 were modestly lower. Vaccine news, and the Brexit deal boosted European bourses in the early going but they disappeared. US equity futures suggest a modestly positive open on Wall Street. Gold and oil prices are a tad higher from where they closed.
GBPUSD rallied from 1.3501 to 1.3610 in early NY trading, in part because of portfolio rebalancing demand for GBP. Prices are also supported by expectations that GBPUSD will outperform the other G-10 currencies in 2021 because Brexit uncertainty has disappeared. The GBPUSD technicals are bullish with a break of 1.3640 targeting 1.4000.
EURUSD is consolidating gains after cracking resistance at 1.2270. Prices peaked at 1.2294, then retreated to 1.2277. There were not any economic reports of note. The EURUSD technicals are bullish above 1.2170, looking for further gains to 1.2500.
USDJPY dropped from 103.58 to 103.12 on the back of broad US dollar weakness.
AUDUSD and NZDUSD climbed due to month-end portfolio demand, and expectations for a robust global economic recovery in 2021, boosting risk sentiment.
USDCAD declined alongside gains in AUDUSD and EURUSD. Prices were also undermined by higher crude prices, which rose after the American Petroleum Institute (API) reported a 4.8 million decline in weekly crude inventories.
USDCAD Technicals: The intraday USDCAD technicals are bearish below 1.2880, looking for a break of support at 1.2750 to test 1.2700. For today, USDCAD support is at 1.2750 and 1.2700. Resistance is at 1.2820 and 1.2870. Today’s Range 1.2710-1.2790
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank