US Dollar On The Back Foot Again

The greenback has continued to weaken as 2021 progresses, reversing the mild hedging led strength we saw into the New Year. Focus remains on Georgia where the Senate election results have still not been called.

• Oil caught a bid Tuesday after the OPEC+ group announced a decision to reduce supply, this helped support AUD as it pushed to the highest levels since 2018, NZD saw similar moves.
• USD/JPY slid Tuesday as the greenback lost ground. The rate was additionally weighed on by the growing perception that a state of emergency in Tokyo and three surrounding areas may soon come to fruition. USD/JPY printed its worst levels in 10 months.
• EUR/USD popped above 1.2320 to touch its highest since April 2018 before pulling back slightly. GBP/USD last at 1.3625, but still some way off highs of 1.37 on Monday. GBP is supported by reports in The Times that millions more coronavirus vaccines were on the way.
• Tensions continue to simmer between the US and China. The NYSE is reconsidering its decision to halt the delisting of 3 Chinese telecommunications firms after US Tsy Sec Mnuchin opposed the decision to grant the companies exculpation. The PBOC fixed USD/CNY at 6.4604, another stronger fix after 648 pips yesterday. There were reports in China Sec. Journal that the foundation still exists for the yuan to continue to appreciate in 2021, but the pace may slow due to global economic recovery and normalization of major economies' MonPol.
• Today's key data releases include China's Caixin Services & Composite PMIs, flash German & French CPIs, as well as U.S. ADP employment change & final durable goods orders. BoE Gov Bailey is set to speak on the FSR.