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Greenback On The Backfoot As 2021 Underway

FOREX

A fairly sluggish start to 2021 trade. The U.S. Congress is set to confirm the election of Joe Biden for the next U.S. President this week. Outgoing Pres Trump reiterated his calls for a vote recount in Georgia. The political outlook in the U.S. will remain cloudy at least until after Tuesday's Georgia Senate runoff. Aside from some lingering political uncertainty in the U.S., global coronavirus concerns are weighing on the U.S. dollar.

  • GBP/USD is up 8 pips at 1.3679, sterling could face some headwinds after the UK recorded another daily high in new Covid-19 cases, while PM Johnson warned that tougher restrictions might be imminent. Opposition leader Starmer urged the PM to declare a nation-wide lockdown within 24h. There was some optimism on reports that the UK is poised to give the first shots of AstraZeneca's vaccine on Monday.
  • The weekend saw Tokyo Gov Koike & govs of three neighbouring prefectures urge central authorities to declare a state of emergency in the area to stop the spread of new Covid-19 infections, but the central gov't said it will consult experts before making a decision. Latest reports indicate a 1 month lockdown from Jan. 9. USD/JPY last down 20 pips at 103.00, dragged lower by a weaker U.S. dollar.
  • AUD/USD last up 8 pips, getting a bit of a boost after reports that New South Wales found no new cases of Covid-19 yesterday, indicating stricter containment measures over the festive period could be having the desired effect. Markets ignored weaker domestic and Chinese data, while a bid in oil helped support AUD.
  • NZD/USD has wavered around neutral levels, with liquidity sapped by a public holiday in New Zealand. The rate last changes hands at 0.7193, up 5 pips.
  • The PBOC fixed USD/CNY at 6.5408, around 159 pips weaker for the yuan than the previous fix. Despite this, USD/CNH opened below the 6.50 handle and has proceeded to decline further, last at 6.4547 and touching the lowest levels since June 2018. The PBOC drained a net CNY 140bn from the system today.
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