18.01.2021: USD extends gains: outlook for USD/JPY, AUD/USD
As trading floors in the US are closed on Monday in observance of the Martin Luther King Jr. holiday, news from China mostly shapes market sentiment. China has unveiled a string of important macroeconomic reports today.
Apart from macroeconomic data, market participants learnt about a new round of conflict between the US and China. US President Donald Trump has ordered Intel to stop selling chips to Chinese tech giant Huawei. So, the government revoked the current license. Intel has to halt shipments to Huawei.
On the back of trade tensions between the two countries, the US dollar was able to sustain its rally that began the last trading week. The US dollar index, which measures the strength of the greenback against a basket of six major currencies, reached the level of 90.80 at the end of today's Asian session.
At the same time, the dollar/yen pair is trading sideways. The pair is still unable to break below the level of 103.57 which limits its downward movement. If the pair consolidates above the level of 104.25, the US currency may advance considerably.
As for China’s economic news, the country released its GDP data. Over the last 3 months of 2020, GDP climbed by 2.6% instead of the projected 3.2%. So, the annual growth rate was better than expected. Overall, it managed to accelerate by 6.5%.
Investors also welcomed China’s industrial production data. Production volumes continue to increase. In December the reading totaled 7.3% year-on-year, logging a 3.5-year high.
However, the Australian dollar, which is usually sensitive to any news from China, failed to gain momentum and decreased. The fact is that a new cluster of active coronavirus spread has been detected in Australia, in the suburbs of Sydney. Versus the greenback, the Aussie is declining under the level of 0.7641. It may also slide to the next support level of 0.7465.
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