Daily Market Commentary 8th January 2021

Markets regained upward momentum, as the political crises in Washington was resolved overnight and liquidity resumed it’s search for return. US Stock Markets pushed into fresh record territory as some sort of certainty was restored to the US political scene. Trump protestors massed in Washington and stormed the Congress, in an effort to prevent Biden being confirmed as President elect. They succeeded, but order was restored and Congress confirmed Biden as the next President of the USA.

US equity markets rallied and the US Dollar rebounded slightly, with the EUR falling to 1.2270, while the GBP drifted back to 1.3550. The ISM Non Manufacturing number was a surprisingly strong improvement and added some vigour to market sentiment, while weekly jobless claims came in lower than expected. EU Retail Sales contracted 2.9%, dragged lower by an 18% contraction in France, reflecting the weakness of consumer demand. Virus related restrictions are severely damaging European economies and will continue to do so for months to come.

Australian trade numbers were significantly lower than expected, as exports declined and Imports surged 10 %, for the month of November. This combined with a resurgent reserve forced the AUD back to 0.7750, while the NZD fell back to 0.7250. These commodity currencies are experiencing an recent renaissance, as geographical isolation has allowed protection from a resurgent virus and gains from a unattractive US Dollar. Political disruptions aside, more attention will be paid to economic data and activity.