Currencies Largely Consolidated, Gold and Silver Steady

26 Jan 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • The US lags behind on its vaccination target
  • Janet Yellen commences her tenure as Treasury Secretary

Major currencies have largely consolidated as the week unfolds. Traders and investors appear to favor a predominantly risk-off approach to global markets this week as the coronavirus continues to record new highs and to keep the global economy under pressure. The US surpassed the 25 million mark in confirmed infections as the country is racing to distribute the vaccine as quickly as possible.

According to Joe Biden’s target to administer 100 million vaccines in 100 days, the US should vaccinate around 30% of the population by spring. Presently, nearly 20 million Americans have received the first jab. The pace of vaccination is lagging behind the initial program’s goal which stood at 20 million vaccines given to the population by the end of December.

Additionally, the markets’ risk-off sentiment towards the US stock market was aided by the US Senate Majority Leader’s recent comment. According to Chuck Schumer, the greatly anticipated Covid relief package will most likely be negotiated around mid-March. The news caused US futures to slip ahead of the opening of the trading session on Tuesday.

As markets across Europe open for trading today, investors seem optimistic, compared to yesterday’s gloomy session which ended in red for Germany’s DAX, France’s CAC40, and UK’s FTSE100. Same indexes today open on a high note. DAX is up over 1.00%, while FTSE100 and CAC40 are equally up about 0.60%.

Investors Await Tech Quarterly Results

On the currencies front, the week so far brings rather calm and consolidated trading. The EURUSD is keeping near the 1.2130 marks, slipping some 0.40% from the weekly open of 1.2168. The dollar is keeping flat against the Japanese yen as the USDJPY rate is now around 103.75-80, flat on the week. The British pound is struggling for gains as the GBPUSD is in its third consecutive day of losses. The rate is gravitating towards the 1.3640 level, down from a two-year high reached last week when the cable was almost 1.3750. The USDCHF pair is climbing this week as the exchange rate is closing in on 0.8900, currently around 0.8890.

Gold and silver have consolidated the past couple of days. The yellow metal is largely neglected by investors and the price has been steady at around $1,850 with a weekly low of $1,847. Silver is following in the gold’s footsteps, also consolidating near-flat weekly levels around $25.50 with a low of $25.18.

Investors’ attention seems to be on the earnings season as this week is the busiest in which over a hundred companies from the S&P500 are set to report. The market will be monitoring tomorrow’s quarterly results by Tesla, Apple, and Facebook. Additionally, market participants are looking to find out the latest Fed decision on Wednesday. Expectations are that the same course will be maintained.

Elsewhere, Janet Yellen takes charge at Treasury after she was confirmed as the new US Secretary of Treasury. The first woman to lead the department, Ms. Yellen is faced with a pandemic-battered economy, growing unemployment, prospects for rising inflation, and a relief package that will most likely be delayed.

Her first orders of business include selling the stimulus package as Biden’s administration struggles to gain Republican support. Ms. Yellen will also be filling staff in her first days in the office.

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