Review of the dollar, euro, pound, yen, aussie and gold prices for January 7, 2021


The European currency is trading slightly ahead of the US dollar today, holding close to record highs, renewed once again yesterday. On January 6, negative macroeconomic statistics were released, which, however, had practically no effect on the level of demand for risk. Composite index of business activity in the manufacturing sector of the euro area in December from Markit fell from 49.8 to 49.1 points with neutral forecasts. The service sector lost more – from 47.3 to 46.4 points. Germany’s harmonized consumer price index declined 0.7% y / y in December, which coincided with the decline in November. Analysts had expected the index to improve to -0.6% y / y. On a monthly basis, inflation in Germany gained 0.6% m / m after falling by 1.0% m / m in the previous reporting period. Investors’ attention on January 7 is focused on a block of statistics on retail sales, consumer inflation and the level of consumer confidence in the eurozone for November-December.


The British pound is trading mixed against the US currency today, consolidating at 1.3600. The pound is actively losing bullish sentiment, responding to another quarantine imposed by the UK authorities against the background of a sharp increase in the incidence of coronavirus in the country. In addition, the market increasingly reacts negatively to the prospects for trade relations between the UK and the EU, despite the fact that the parties still managed to conclude a trade agreement at the end of last year. However, some investors are very optimistic, hoping that the UK will be able to benefit in the medium or long term from a more active vaccination campaign that is currently underway. The current vaccination plan calls for about two million vaccinations per week, which will put the UK at the top of the list very soon. Macroeconomic statistics from the UK released on January 6 disappointed. The index of business activity in the services sector fell from 49.9 to 49.4 points with the unchanged forecast.


The Aussie is showing mixed performance against the US dollar, but is holding at record highs and resistance at 0.7800. The instrument is still supported by weak positions in the US currency, as well as some enthusiasm in the oil market, where prices are rising in response to the OPEC + decision to maintain production restrictions in February and March. The macroeconomic statistics from Australia released on Thursday were mixed. The volume of exports from the country in November slowed down from + 4.4% to + 3%, while imports over the same period rose sharply from + 2% to + 10%. As a result, the trade balance at the end of November fell stronger than forecasted, from 6.583 to 5.022 billion against the forecast of 6,200 billion Australian dollars. At the same time, the indicator of issued building permits in November increased by 2.6% mom, which turned out to be better than market expectations by 0.1%. On an annualized basis, the number of permits increased by 15% y / y, accelerating from the previous value of 14.3% y / y.


The US dollar continues corrective gains against the yen, recovering from record lows since March, updated the day before. The tool is supported by technical factors, as well as the threat of noticeable restrictions in Japan due to new outbreaks of COVID-19 in the country. In turn, the negative macroeconomic statistics from the US put pressure on the positions of the American currency on January 6. The ADP report on employment in the private sector showed a decline of 123 thousand (for the first time since April). Analysts had expected the positive dynamics to remain at +88 thousand. The index of business activity in the service sector from Markit in December showed a decrease from 55.3 to 54.8 points with an unchanged forecast. Composite PMI for the same period corrected down from 55.7 to 55.3 points, which also turned out to be worse than the market’s neutral forecasts.


Gold prices are declining today, developing a strong corrective impulse that formed yesterday in response to the strengthening of the US currency. In particular, investors were encouraged by the victory of the US Democratic candidates in the second round of elections in Georgia. Thus, the Republican Party lost control in the Senate, and the final word will now remain with Vice President Kamala Harris. It is expected that this will allow Joe Biden to move initiatives through Parliament faster, which should positively affect the prospects for fiscal policy. Additional pressure on the position of the precious metal is exerted by the growth in the yield of US Treasury bonds. The yield on 10-year securities surpassed the 1% mark for the first time since the outbreak of the pandemic in early 2020.

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