The US dollar clawed back some losses on Friday despite a series of weaker than expected data, including retail sales and industrial production. However, Treasury yields pulled higher once more after the Michigan Sentiment data showed inflation expectations holding up. This rebound for USD is counter to a current trend of weakness and the mild corrective bias is resuming on Monday morning. 

It is Martin Luther King Day public holiday for the US so it is likely to be a fairly quiet day of trading ahead. However, indices are ticking slightly higher with a mild risk positive bias, helped by higher than expected Chinese GDP overnight. 

Today’s news

Main drivers: Markets marginally risk positive; China GDP higher than expected; MLK Day in the US; Economic calendar: quiet

Sentiment slightly positive: After a mild positive close on Wall Street on Friday there has been a reaction higher on European indices this morning. The positive sentiment is also reflected in the moves on forex majors, with commodities also higher on a slightly weaker USD.  

Martin Luther King Day in the US: A public holiday for the US today. Expect thinner markets, likely quieter trading than normal. Can be uncertain volatility but probably reduced. [Quiet markets likely] 

China GDP beats, other data mixed: Q4 GDP came in at +4.0% which was higher than the expected fall to +3.6% (from +4.9% in Q3). Other data was mixed, with industrial production increasing to 4.3% and higher than the 3.6% expected. However, retail sales fell much lower than forecast at 1.7% (3.7% expected). [On balance, mildly supportive for risk appetite] 

UK PM Johnson still faced pressure from “party gate”: The political fallout from a series of lockdown breaking parties at the prime minister’s house rumbles on [GBP immune, for now] 

Central Bank speak: No speakers scheduled for today

Economic Data:

  • No major data due

Markets Outlook

Broad outlook: Despite a USD rebound on Friday, the bias of a USD correction is seeping back in again today. There is a mild risk positive bias helping to support indices and commodities.

Forex: Positive risk bias. JPY is underperforming along with the USD. Higher risk AUD and NZD are slight outperformers.

  • EUR/USD breakout continues still implies c. 1.1585. A mild pullback looks to be a buying opportunity. Good initial support now around 1.1400, with the breakout support band 1.1360/1.good support for pullbacks. Initial resistance 1.1482 and then at 1.1525.


  • GBP/USD a pullback to the uptrend (around 1.3650) looks to be another chance to buy. Building a new higher low will be important after two negative daily candles. Support at 1.3570/1.3600 is key. Initial resistance around 1.3750 before the next key barrier of the October high of 1.3835.
  • AUD/USD needs to build support again after a sharp near-term unwind. Support is now around 0.7185/0.7200. The outlook remains positive but moves are choppy. Initial resistance at 0.7260/0.7270 with 0.7315 now key.

Commodities: precious metals positive bias within trading ranges, oil continues higher.

  • Gold is consolidating but with a positive bias that is looking to test the resistance at $1830/$1832. Buyers are consistently coming around $1821/$1815 near term, however, for now, a breakout cannot be achieved. Momentum backs the continuation of the range but also favors upside pressure.
  • Silver also holds a positive bias within the range but is slightly less positive than gold in the move for a test of its resistance at $23.25/$23.45. We are neutral whilst this resistance holds, but favor pressure on the resistance. Initial support at $22.60/$22.70.
  • Brent Crude oil continues to edge higher, although is slightly back from intraday highs this morning. A test of the $86.95 resistance is increasingly likely. Initial support at $85.30 with $83.88 now a higher low.

Indices: positive traction is hard to come by for now. Europe is lower today after yesterday’s Wall Street decline, but US futures are trying to build support again. The broad outlook remains uncertain.    

  • S&P 500 futures pulling lower on Friday means that the uptrend channel support comes back into view. Momentum is fairly ranging so we are not expecting a decisive breakdown of the channel. Subsequently, we position for buying near-term weakness to play a continuation of the choppy phase of trading.
  • DAX has bounced again from around the pivot support band 15,800/15,865. There is an appetite to buy around this level, but unless resistance at 16,088 can be overcome, we remain broadly neutral. Below 15,720 we turn negative, above 16,088 is more positive.
  • FTSE 100 continues its impressive technical strength and is an outperformer again, breaking to levels not seen since December 2019. The next resistance is 7695. Initial support at 7540/7550 and then 7513. 

Support & Resistance levels