IFX Market Report: Friday 15th January 2021

The U.S. Dollar has strengthened overnight following an announcement from Joe Biden that he will put in place a $1.9 trillion stimulus plan. With the US recording well over 200,000 new COVID-19 cases in a day, if passed by Congress, Biden's stimulus package will include $1 trillion for US households, with direct payments of $1,400 to all Americans. EURUSD has taken a hit as direct result of Biden's package, falling below the 1.2150 mark this morning.

GBPUSD opened at 1.3663 yesterday and advanced in the session, attempting to test the 1.37 barrier. Despite briefly surpassing 1.37 after the close, the pair was only able to finish at 1.3691. Since the Dollar gained momentum overnight, the pair now trades below 1.3650.

GBPEUR was also able to gain some upside yesterday. The pair opened the session at 1.1249 and finished at 1.1262.

EURUSD had a relatively quiet day yesterday as it awaited important US data, Powell’s speech, and Biden’s announcement on stimulus. The pair started the day at 1.2146 and finished at 1.2155. Looking ahead, it would appear the Dollar is on the up, meaning we could see more moves to the downside for EURUSD.

On the data front, UK GDP figures were released this morning, indicating the UK economy contracted by 2.6% during the month of November. While this is not surprising given a second national lockdown, it is in fact better than expected, with the forecasted figure at -5.6%. As for the YoY figure, this also came out better than expected, coming out at -8.9% as opposed to the forecasted -12.1%. Manufacturing Production also came out better than forecasted at -3.8%, with the consensus at -4.8%. Sadly, all the UK data was not so positive. Goods Trade Balance was released at £-16.012B despite a forecast of £-10.175B. Also, Industrial Production missed expectations, coming out at -4.7%, while being forecasted at -4.2%.

In regard to the rest of today’s calendar, at 10:00 we have Balance of Trade from the Eurozone. Then in the afternoon, we have US Retail Sales, followed by US Industrial Production and the Michigan Consumer Sentiment Prel for January.

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