Macro Roundup (Jan 25)

Published: Jan 25, 2021 09:00 (GMT+8)
The dollar drifted higher on Friday after three straight days of losses, and riskier currencies fell, as bleak non-U.S. economic data gave global equity markets reason to pause after another week of record highs.

SHANGHAI, Jan 25 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar drifted higher on Friday after three straight days of losses, and riskier currencies fell, as bleak non-U.S. economic data gave global equity markets reason to pause after another week of record highs.

As a safe haven, the U.S. currency tends to rise in times of financial and economic stress that results in lower risk appetite.

The S&P 500 and the Dow along with U.S. Treasury yields were lower as well, suggesting a generally somber mood in financial markets.

The dollar did pare gains and riskier currencies cut losses earlier after upbeat U.S. economic data - a rise in factory activity to its highest in more than 13 years in January and an unexpected 0.7% gain in existing home sales.

The greenback had fallen against a basket of currencies for the past three sessions as market optimism about new U.S. President Joe Biden’s fiscal stimulus plans prompted traders to seek riskier assets, producing gains in currencies such as the New Zealand and Australian dollar.

On Wall Street, US stock index futures were modestly higher in overnight trading on Sunday, as Wall Street prepares for the busiest week of earnings, which will include reports from some of the largest tech companies.

Futures contracts tied to the Dow Jones Industrial Average gained 40 points, indicating a 57-point jump at the open. S&P 500 futures advanced 0.16%, while Nasdaq 100 futures rose 0.29%.

Stocks finished mixed on Friday — the S&P 500 and Dow finished in the red while the Nasdaq Composite closed at a record high — although all three posted a gain for the week. The Dow registered its fifth positive week in six while the S&P posted its third positive week in four. The Nasdaq advanced 4.19% last week for its best week since November and fifth positive week in six as shares of Big Tech names pushed the index to a new all-time high.

The move higher came as President Joe Biden tries to push through a $1.9 trillion stimulus program that many congressional Republicans oppose. The fiscal aid includes direct checks to millions of Americans, aid to state and local governments, funding for Covid vaccines and testing, a boost to the minimum wage and enhanced unemployment benefits, among other things.

Oil prices fell on Friday, weighed down by a build in U.S. crude inventories and worries that new pandemic restrictions in China will curb fuel demand in the world’s biggest oil importer.

Brent crude futures declined 60 cents, or 1.1%, to $55.50 a barrel.

US West Texas Intermediate (WTI) crude futures fell settled 86 cents, or 1.6%, lower at $52.27 per barrel.

Overall U.S. crude inventories surprisingly rose by 4.4 million barrels in the most recent week, versus expectations for a draw of 1.2 million barrels.

Recovering fuel demand in China underpinned market gains late last year while the United States and Europe lagged, but that source of support is fading as a fresh wave of COVID-19 cases has sparked new restrictions.

Gold prices fell as much as 1.8% on Friday as a broader market sell-off weighed on the metal along with a firm dollar, while hopes for further stimulus from the U.S. kept bullion on track for its first weekly gain in three.

Spot gold fell 1% to $1,851.50 per ounce, retreating from a two-week high hit on Thursday. The metal was up 1.4% so far this week. U.S. gold futures fell 0.8% to $1,851.50.

“Regardless of the asset class everything from equities to agricultural to softs are selling off and a lot of emphasis is on whether the stimulus could be passed and whether the (COVID-19) vaccine rollout could be effective,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

The strength in the dollar was also weighing on bullion with benchmark U.S. Treasury yields firm above 1%, Streible added.

US President Joe Biden has proposed a $1.9 trillion coronavirus relief plan, though some Republicans expressed concerns over the amount.

Keynote speech by Christine Lagarde, President of the ECB and Germany IFO Business Climate Index for January will be released today.

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