Forex Today: Markets shrug off Capitol storming, USD rocked by blue wave, NFP hints eyed

Yohay Elam FXStreet

Here is what you need to know on Thursday, January 7:

Markets have been shrugging off the storming of the Capitol by supporters of President Donald Trump. Investors focus on Democrats' win of the Senate after the elections in Georgia, pushing stocks higher. The dollar is torn by a move away from the safe-haven currency and higher yields. Coronavirus and vaccine statistics and jobless claims are eyed.

US politics: The world was shocked to see a mob incited by Trump storming the Capitol and vandalizing it. The president continued making his unfounded claims of fraud and supporters seemed to try to overturn the election results. Police eventually gained control of the event, allowing Congress to continue ratifying President-elect Joe Biden's win.

The process, usually a short ceremonial one, is set to conclude later on Thursday. Stocks fell off the highs as the rioting began, but ended higher while futures are pointing to a positive open on Wall Street.

Fiscal stimulus coming: Democratic candidates Raphael Warnock and Jon Ossof won their Senate runoff races in Georgia, allowing their party effective control of the upper chamber. That allows President-elect Joe Biden to push additional relief packages and markets are cheering.

The US dollar has been having a mixed reaction. On the one hand, the safe-haven currency was sold off – yet it recovered as bond yields climbed on prospects of higher government debt. Ten-year Treasuries hold their ground above 1%. Gold has also been whipsawed, failing to hold onto gains.

Five factors moving the US dollar in 2021 and not necessarily to the downside

The Federal Reserve's meeting minutes from the December meeting conveyed a balanced message, with some members ready to expand the bank's bond-buying scheme and others willing to consider tapering it down. The Fed remains on hold.

ADP's private-sector jobs report showed a disappointing loss of 123,000 jobs in December, lowering expectations for Friday's Nonfarm Payrolls. The data contradicts the upbeat ISM Manufacturing Purchasing Managers' Index for last month.

The ISM Services PMI, due out on Thursday, provides the final hint toward the official labor figures. Weekly jobless claims for the week ending January 1 are also of interest.

Coronavirus continues raging in the northern hemisphere. Britain is struggling more than other countries, yet it is ramping up its vaccine distribution. GBP/USD is trading below 1.36, also amid England's strict lockdown.

More Coronavirus: Statistics, herd immunity, vaccine calendar and impact on financial markets and currencies

EUR/USD is battling the 1,23 level, driven mostly by the dollar. Preliminary eurozone inflation figures for December are set to remain subdued. German Factory Orders surprised with an increase of 2.3% in November.

Bitcoin has been extending its gains, hitting new highs above $37,000. Ethereum is also holding its gains near $1,200.

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.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.