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Reports that Biden’s is set to announce a $2 trillion package have been boosting markets and weighing on gold. Investors are shrugging off Trump’s second impeachment and eyeing a speech from Jerome Powell, jobless claims, and coronavirus headlines.
Jerome Powell, Chairman of the Federal Reserve, speaks later in the day and will likely convey a message of stability regarding the Fed’s bond-buying scheme. His colleagues have been talking about the possibility of tapering the scheme, somewhat boosting the dollar.
US initial jobless claims are set to stabilize below the 800,000 level as the US economy continues struggling with covid.
Europe: Germany reported another daily death record and the end to the lockdown is out of sight. The European Central Bank releases its meeting minutes on Thursday, and it may repeat President Christine Lagarde’s message that uncertainty has receded.
UK: Prime Minister Boris Johnson is under growing pressure to tighten restrictions once again as pressure on hospitals intensifies. Covid mortalities hit a record on Wednesday, but infections show tentative signs of falling. GBP/USD remains buoyed by Britain’s accelerated vaccination campaign and by hawkish words from the Bank of England early in the week.
Chinese exports have increased in December, showing the strength of the world’s second-largest economy. A World Trade Organization delegation has arrived in Wuhan to investigate the origins of COVID-19.
The GBP/USD is bullish but before the next bounce we might see a retracement.
Yesterday we were witnessing a drop in the GBP/USD. It was normal as it’s a part of a retracement. We could see the market bullish again probably around 2 POC zones. 1.3600-10 is the first zone and below 1.3600 we should see a drop towards the second zone. The second POC zone is 1.3505-1.3522. This is a stronger POC so the bounce could be happening here too. Targets are 1.3680 and 1.3730.
The EUR/CHF pair has eroded the 1.0797 55-day ma and is looking more vulnerable. Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, highlights the next support levels at the 1.0736 December low and the 1.0724 200-day moving average.
“EUR/CHF has stalled at the 1.0858/91 September and December highs and has now eroded the 55-day moving average at 1.0797. This guards the December low at 1.0736 and the 200-day ma at 1.0724.”
“The market is currently vulnerable on the downside. Below the December low at 1.0736 lies good support at the late July, August and September lows at 1.0727/12. Within this area meanders the 200-day moving average at 1.0724 and below it sits the November trough at 1.0630.”
The barrel of WTI reached fresh yearly tops just below the $54.00 mark on Wednesday before closing the session in the red territory. The move was in tandem with rising open interest and volume, which should be supportive of a corrective move in the very near-term. This view is reinforced by the current overbought levels in the commodity (gauged by the daily RSI). The resumption of the upside is seen targeting the February 2020 high near $54.50 per ounce.
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