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Daily Market Commentary 6th January 2021

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US Markets rebounded overnight, regaining some of the dramatic losses on share markets, following the sell-off on the opening trading day of the year. Fears over the virus and the associated restrictions remain, as does todays US Senates races in Georgia, but it appears markets over-reacted. The recovery in the US Dollar was brief and unsustained, with the GBP jumping to 1.3620, while the Yen traded 102.60. US ISM Manufacturing data spiked upwards, which was some confirmation of improving economic conditions, but fears and vulnerabilities remain.

Commodity currencies took full advantage of the retiring reserve, with the AUD spiking back to 0.7770, while the NZD broke back above 0.7250. The relative immunity from the surging virus and associated economic and social restrictions, has allowed these trade exposed currencies to benefit greatly. Todays US Senate election in Georgia may have an impact on markets, as investors look for a Republican victory, to ensure divided Government. Global commodity prices continue to improve with dairy prices rising and oil jumping above $50/barrel.

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Markets will focus on the election and also Washington, for a joint meeting of Congress, set to allocate electoral votes for the Presidency. There is also a plethora of economic data releases to tickle markets, in the coming days.

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