Yellen is proposing to increase spending now that interest rates are low but at the same time, she suggests higher taxation for the wealthy and the corporations. While spending is good for risky assets as it erodes the value of the dollar and makes lending cheaper higher taxation is negative for the US stock markets. This she says, is needed to finance infrastructure spending as well as spending on research and development the Biden administration aspires. Initiation of this spending program would not, however, take place before the coronavirus pandemic is under control. USD weakness continued yesterday and risky assets gained ground as expected. We said in yesterday’s report that we expected USD weakness to support risky assets in yesterday’s trading. This was the case and strength has continued in the Asian session today. Crude oil rallied to near recent highs turning the USDCAD lower while EURUSD and Cable both gained ground. USDJPY kept on ranging and is again near its recent supports. Today’s economic calendar is full and promises action for change. We have Canadian inflation data and BOC rate decision and press conference possibly bring us trading opportunities today. BOE governor Bailey and the US President Biden will be speaking today. See our economic calendar for times and details. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.
We said on January 8th that a failure to break 1.2820 resistance in EURUSD is likely to bring the pair to 1.2150 this is what happened and after a rally from the support, we saw price dropping all the way down to 1.2060 before turning around and rallying higher. If you want to learn how to find and trade setups like these you are more than welcome to join us to the next Live Trading Strategy Workshop. Go to TIOmarkets.com/analysis and register for the next event.
Now EURUSD has broken out of a bearish channel and is trending higher. The width of the channel points to 1.2178 resistance which roughly coincides with the 38.2% retracement level. The next key resistance level can be found at 1.2222. As there is broad-based USD weakness in the currencies we will look for quick intraday long signals in EURUSD above 1.2116. This support coincides roughly with 23.6% retracement and 50-period SMA. If you don’t know what kind of trading strategies to apply in an environment like this we again welcome you to join us on TIOmarkets.com/webinars and learn more vital skills for trading. Our targets for successful long entries are T1: 1.2164 – 1.2181 and T2: 1.2198 – 1.2214. Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts.
Recent macroeconomic data releases
- US Average Hourly Earnings 0.8%, 0.2% expected
- US Non-Farm Employment Change -140K, 60K expected
- US Unemployment Rate 6.7%, 6.8% expected
- US CPI 0.4%, 0.4% expected
- US Core CPI 0.1%, 0.1% expected
- US Core Retail Sales -1.4%, -0.1% expected
- US Retail Sales -0.7%, 0.0% expected
- Chinese GDP 6.5%, 6.2% expected
Important macroeconomic data releases this week
- Canadian CPI 0.1% expected
- BOC Monetary Policy Report
- BOC Rate Statement
- BOC Overnight Rate 0.25% expected
- BOC Press Conference
- BOE Bailey Speaks
- US President Biden Speaks
You may access the times and dates in the economic calendar here.
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Chief Market Analyst
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