• AUD/USD begins February with a gap-down after taking a U-turn from highest since March 2018 peak the previous month.
  • Gyrations in stocks, five-day lockdown in Perth and downbeat China PMIs favor sellers.
  • Second-tier data from Australia, China’s Caixin Manufacturing PMI will decorate the calendar in Asia.

AUD/USD kick-starts February with a downside gap from 0.7641 to 0.7627, currently at 0.7624, as Monday’s trading begins in Asia. The risk barometer not only bears the burden of the recent trading woes, mainly emanating from equities, but coronavirus (COVID-19) headlines and soft data from China also weighed on the quote.

Perth on a five-day lockdown…

With a fresh covid case of a hotel worker renewing fears of a wider contagion, the Australian government announced a five-day activity restriction schedule in Perth. The move from Canberra recalled the bears that recently stepped back due to the increased pace of global vaccinations and reduction in infections in the UK, the US and Europe.

Elsewhere, China’s NBS Manufacturing PMI and Non-Manufacturing PMI for January came in weaker than expected. Details suggest that the headlines Manufacturing PMI eased below 51.6 forecast to 51.3 while Non-Manufacturing PMI dropped to 52.4 from 52.6 market consensus. Weakness in the official activity numbers seems to push Caixin Manufacturing PMI towards a softer reading than the 53.00 previous, expected 52.7, for January.

On a broader scale, last week’s equity traders’ frenzy seems to have alarmed market regulators and hence the risk-off is likely to extend. As per the latest report from Goldman Sachs, last week did show the largest hedge fund positioning ‘de-grossing’ since February 2009 and thus there is still ongoing risk of positioning-change-driven moves.

Against this backdrop, the Wall Street benchmark closed January on a negative note while the US 10-year Treasury yields rose 1.6 basis points (bps) to 1.071%. The same risk-off moves helped the US dollar index (DXY) to trim early Friday’s losses while closing the day with no major gains or losses.

Moving on, TD Securities Inflation for January, December’s Home Loans and ANZ Job Advertisements will be the readings to watch from Australia. Though, major attention will be given to China’s Caixin Manufacturing PMI for January. It should, however, be noted that the risk catalysts will keep the driver’s seat.

Technical analysis

A sustained downside break of six-week-old horizontal support, around 0.7640, directs AUD/USD sellers toward 50-day SMA, at 0.7600 now.

 

What you need to know on Monday, February 1:

Investors attention was diverted away from the FX board, amid turmoil in equities. The American dollar benefited from a dismal market mood but traded within familiar levels against its European rivals. Commodity-linked currencies and the JPY were the most affected by risk-aversion.

Gamestop shares soared amid retail investors’ actions gathered on social media looking for a short squeeze. The stock collapsed on Thursday as different brokers put restrictions in place on options trading, taking new positions and hiked margin levels. The frenzy grew as restricting trading borders illegality.  Silver also fell under individual investors’ radar. The situation is far from over, and turmoil will likely extend into the upcoming days.   

Wall Street finished the week with sharp losses after reaching fresh January lows. US Treasury yields, however, ticked higher ahead of the close, posting modest gains on the back of generally encouraging US data.

 Vaccine-related news added to the dismal mood. The one-shoot from Johnson & Johnson has proven 66% effective in phase three trials, while Pfizer’s CEO  said  that “there is a high possibility that future variants will elude vaccines.”   Despite delayed delivery, vaccines are rolling out and hopes are that immunity will boost growth in the second half of this year.

On a positive note, the number of new coronavirus contagions keeps decreasing globally after peaking at 845K early on January to roughly 500K reported on Saturday. Still, tough restrictive measures remain in place, particularly in Europe, as several countries extended lockdowns or curfews throughout February.

Israel, the United Arab Emirates and the UK are the countries that have vaccinated the highest percentage of their population. The UK leading immunization may take a turn to the worst, as on Friday, the EU  imposed export restrictions on vaccines after accusing the British- AstraZeneca of favoring its home market, in detriment of its contracts with the EU

Australia announced a five-day lockdown in the Pert area amid a new coronavirus case in a hotel worker, those set to quarantine arrivals. Authorities fear it could be one of the contagious strains coming from the UK or South Africa.

Gold and Oil gave up on Friday, weighed by equities. The bright metal settled at $ 1,847.50 a troy ounce, while WTI finished at $52.10 a barrel.

Bitcoin Price Analysis: BTC gets rejected near $39,000, correction to $32,000 likely

What you need to know on Monday, February 1:

Investors attention was diverted away from the FX board, amid turmoil in equities. The American dollar benefited from a dismal market mood but traded within familiar levels against its European rivals. Commodity-linked currencies and the JPY were the most affected by risk-aversion.

Gamestop shares soared amid retail investors’ actions gathered on social media looking for a short squeeze. The stock collapsed on Thursday as different brokers put restrictions in place on options trading, taking new positions and hiked margin levels. The frenzy grew as restricting trading borders illegality.  Silver also fell under individual investors’ radar. The situation is far from over, and turmoil will likely extend into the upcoming days.   

Wall Street finished the week with sharp losses after reaching fresh January lows. US Treasury yields, however, ticked higher ahead of the close, posting modest gains on the back of generally encouraging US data.

 Vaccine-related news added to the dismal mood. The one-shoot from Johnson & Johnson has proven 66% effective in phase three trials, while Pfizer’s CEO  said  that “there is a high possibility that future variants will elude vaccines.”   Despite delayed delivery, vaccines are rolling out and hopes are that immunity will boost growth in the second half of this year.

On a positive note, the number of new coronavirus contagions keeps decreasing globally after peaking at 845K early on January to roughly 500K reported on Saturday. Still, tough restrictive measures remain in place, particularly in Europe, as several countries extended lockdowns or curfews throughout February.

Israel, the United Arab Emirates and the UK are the countries that have vaccinated the highest percentage of their population. The UK leading immunization may take a turn to the worst, as on Friday, the EU  imposed export restrictions on vaccines after accusing the British- AstraZeneca of favoring its home market, in detriment of its contracts with the EU

Australia announced a five-day lockdown in the Pert area amid a new coronavirus case in a hotel worker, those set to quarantine arrivals. Authorities fear it could be one of the contagious strains coming from the UK or South Africa.

Gold and Oil gave up on Friday, weighed by equities. The bright metal settled at $ 1,847.50 a troy ounce, while WTI finished at $52.10 a barrel.

Bitcoin Price Analysis: BTC gets rejected near $39,000, correction to $32,000 likely

  • Las principales bolsas estadounidenses cayeron el viernes debido a que los inversores se preocupan por las consecuencias del reciente frenesí inducido por los comerciantes minoristas sobre la estabilidad financiera.
  • El S&P 500 y el Dow borraron sus ganancias del año.

Fue un final feo para la semana en Wall Street con los tres índices principales cayendo y ningún sector se libró de la presión vendedora; el S&P 500 retrocedió hasta 3.700, perdiendo un 1.9% en el día y un 3.3% en la semana, el Dow Jones Industrial Average volvió a bajar al nivel de 30.000, también un 1.9% en el día y un 3.3% en la semana, mientras que el Nasdaq 100 cayó un 2.1% para volver a estar por debajo de 13.000, perdiendo un 3.5% semana. La liquidación del viernes hizo que el S&P 500 y el Dow borraran sus ganancias anuales; En el año, el S&P 500 ha bajado un 1.1%, el Dow ha bajado un 2.0%, mientras que el Nasdaq 100 todavía se mantiene en territorio positivo.