Macro Roundup (Jan 21)

Published: Jan 21, 2021 09:00
The dollar fell against most currencies on Wednesday, as risk appetite held up on optimism about a massive stimulus package under the new Joe Biden administration that will likely bolster a US economic recovery.

SHANGHAI, Jan 21 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar fell against most currencies on Wednesday, as risk appetite held up on optimism about a massive stimulus package under the new Joe Biden administration that will likely bolster a US economic recovery.

The greenback slid against the yen as well as currencies tied to commodity prices such as the Australian, Canadian, New Zealand dollars, and the Norwegian crown. The US dollar dropped to a three-year low versus its Canadian counterpart and sterling, while hitting a two-week trough against the yen.

The S&P 500 climbed to a new all-time peak, while US crude futures gained as the risk rally carried on.

Biden was sworn in as the 46th president of the United States on Wednesday, vowing to end the “uncivil war” in a deeply divided country reeling from a battered economy and a raging coronavirus pandemic that has killed more than 400,000 Americans.

On Wall Street, US stock futures were flat in overnight trading on Wednesday after the major averages hit record highs on inauguration day.

Dow futures rose 14 points. S&P 500 futures ticked 0.05% higher and Nasdaq 100 futures rose 0.15%.

Major US airline United dipped more than 2% in extended trading on Wednesday after missing on the top and bottom lines of its quarterly earnings. The airline warned sales would continue to suffer in the early part of 2021 as the coronavirus pandemic drags on.

US equities rose to record highs on Wednesday as the latest batch of strong corporate earnings rolled in, as Joe Biden was sworn in as commander in chief.

The Dow Jones Industrial Average rose more than 250 points to close at a record. Microsoft had the most positive impact on the Dow, adding 52 points to the index.

The S&P 500 climbed 1.4%, notching an all-time high.

Oil rose on Wednesday on expectations that U.S. President Joe Biden’s administration will deliver massive stimulus spending that will lift fuel demand and enact policies that will tighten crude supply.

Brent crude was up 40 cents at $56.30 a barrel. U.S. West Texas Intermediate (WTI) crude settled 26 cents, or 0.5%, higher at $53.24 per barrel.

US President Joe Biden, who was inaugurated on Wednesday, is expected to take measures to curb the US oil industry, including re-entering the Paris climate accord, cancelling a permit for the Keystone XL crude oil pipeline and pausing arctic drilling.

“I think the Biden administration on day one is making it clear that there’s a new sheriff in town and we’re going to go back to policies that are pro-green energy and anti-fossil fuels,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “It's going to mean higher prices and the market is starting to price in that reality.”

Gold rose more than 1% on Wednesday ahead of U.S. President-elect Joe Biden's inauguration, extending gains after his nominee to head the Treasury Department, Janet Yellen, bolstered bets for another pandemic-related stimulus package.

Spot gold rose 1.3% to $1,863.48 per ounce, having risen to an over one-week high earlier. US gold futures rose 1.2% to $1,862.90.

“You have a big day in the United States ... Traders are looking forward to Biden's speech coming up, (while) the comments from Yellen are keeping the metals higher,” said Bob Haberkorn, senior market strategist at RJO Future.

Yellen on Tuesday said pandemic relief would take priority over tax increases, adding that the benefits of a relief package outweighed the expenses of a higher debt burden. Gold is considered a hedge against inflation, which can result from widespread stimulus measures. Biden will be sworn in as the 46th president of the United States on Wednesday, with investors focused on his $1.9 trillion stimulus package proposal and the pace of COVID-19 vaccine distribution.

Key economic data slated for release today include US Initial Jobless Claims as of January 16, US Building Permits for December, the annualised monthly rate of US housing starts for December and preliminary Euro Area Consumer Confidence Indicator for January.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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