Forex Today: Fed fails to cheer Gamestop-ped markets, US GDP, vaccine news eyed

Yohay Elam FXStreet

Here is what you need to know on Thursday, January 28:

The market mood is sour amid concerns about tech earnings, exuberance in stocks, and coronavirus concerns. The Fed's dovish stance failed to cheer investors which now eye US growth figures for the fourth quarter, jobless claims, and vaccine developments.

Gamestop: An army of retail traders buoyed shares of the videogame company, defying hedge funds. The frenzy is seen as a sign of exuberance and a late-stage rally – and is also of worry to regulators and even the White House. Newcomers to markets are mostly organizing on Reddit's wallstreetbets, which has temporarily gone dark.

See Should I buy GameStop (GME Stock) right now?

The Federal Reserve has left its policies unchanged as expected, acknowledging recent weakness and remaining optimistic about a vaccine-fueled recovery in the second half. Fed Chair Jerome Powell stressed that any talk about withdrawing stimulus is "premature" and committed to supporting the economy. Nevertheless, his dovish words failed to cheer investors.

See:

Facebook and Tesla reported results on Wednesday, falling short of investors' expectations. These disappointments added to the sour market mood. The safe-haven US dollar is on the rise.

Stimulus: President Joe Biden's team continues discussing his proposed $1.9 trillion stimulus bill with lawmakers, but is reportedly also ready to go it alone. Treasury Secretary Janet Yellen is involved in deliberations.

The US releases Gross Domestic Product figures for the fourth quarter on Thursday. An annualized increase of 3.9% is projected after sharp changes beforehand. Durable Goods Orders for December mostly missed expectations, somewhat lowering GDP expectations.

See: US Fourth Quarter GDP Preview: Variety is the spice of markets

US jobless claims are also of interest on Thursday. Applications are set to drop from 900,000 recorded last week, but they remain worrying – especially as the latest figures have shown that the economic misery is spreading beyond pandemic-sensitive sectors.

See US Initial Jobless Claims Preview: California returns to work

EUR/USD is on the back foot due to the risk-off mood and also warnings from European Central Bank about the euro's high exchange rate. Officials also opened the door to further lowering the ECB's deposit rate, which stands at -0.50%. Germany and Spain release preliminary inflation figures for January.

The EU and AstraZeneca remain at loggerheads about deliveries of vaccines. The pharmaceutical firm claims that Brussels was late to sign a contract and will, therefore, suffer delays, while the bloc demands immediate deliveries. Regulators are set to approve the jabs on Friday and shortages of doses are already reported in Spain. France is considering new restrictions but has yet to make a decision.

The Pfizer/BioNTech vaccine has proved efficient in neutralizing not only the British variant but also the South African one – albeit with a lower impact on the latter one.

Cryptocurrencies: Bitcoin is trading above $31,000 after dipping earlier below the $30,000 mark. Ethereum is hovering around $1,300.

Gold is on course to close January with a loss, the first such event since 2013.

See Gold Price Forecast 2021: XAU/USD looks to build on 2020 gains with central banks staying dovish

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD bulls seem hesitant near 0.6950

AUD/USD attracts some buyers for the second straight day, though it remains confined within Friday's broader range amid mixed cues. The US PCE data and the US NFP report released last week tempered October Fed hike bets, dragging US bond yields away from multi-year highs and keeping US Dollar bulls on the back foot. However, geopolitical uncertainty is a tailwind for the safe-haven buck, while the RBA's cautious outlook caps the Aussie.

USD/JPY remains confined in a range below 158.00

USD/JPY holds steady around 157.75 during the Asian session on Monday, trading within a one-week-old range. Against the backdrop of soft US PCE data, the US NFP report, released on Friday, tempers October Fed rate-hike bets and drags US bond yields away from multi-year highs. Furthermore, hawkish BoJ expectations amid looming intervention risks support the Japanese Yen, capping the pair. However, geopolitical uncertainty acts as a tailwind for the safe-haven buck and limits the downside.

Gold trades with positive bias around $4,150; upside seems capped

Gold attracts some dip-buyers at the start of a new week, though it remains confined in a familiar range held over the past week or so. Against the backdrop of soft US PCE data, Friday's weak US NFP report tempered bets of an October Fed rate hike. This, in turn, drags US bond yields away from multi-year highs and benefits the non-yielding bullion. The US Dollar, however, draws support from geopolitical uncertainties and could act as a headwind for the precious metal.

Week ahead: Fed minutes in the spotlight amid bond market rout

The first full week of October and the final quarter of the year get underway with little fanfare in terms of the economic agenda. But far from being short on excitement, the coming week will test market nerves, as government bond yields continue to soar on growing worries that the energy crisis will only get worse, fuelling inflation.

CFTC Report: Speculators turn more defensive as Oil exposure falls

The week in one sentence: During the week leading up to September 29, long positions in crude oil were significantly reduced, while short positions in the Canadian Dollar went up. In addition, the positioning of the Australian Dollar and the Japanese Yen declined, while Coffee buying stood out against a more general background of defensiveness.

The Euro is near a one-year low: Inflation could trigger its rebound, not its fall

EUR/USD has fallen to its lowest level since May 2025. The pair hit 1.1312 on Wednesday and trades well below the January peak of 1.2082. The decline reflects a powerful combination of US Dollar strength, geopolitical uncertainty and renewed concerns about Europe's exposure to higher energy prices.