Greenback Moderately Stronger To Open 2021

Following the big losses of 2020, forex players around the world are questioning whether or not the greenback will regain its previous strength in 2021. Thus far, some bids have been hitting the USD, with gains vs the British pound, Canadian dollar, and Japanese yen highlighting today’s action.

For the first trading day of 2021, not much was scheduled for the U.S. economic calendar. Here’s a look at the noteworthy events from earlier:

Event                                                         Actual               Projected        Previous 

Markit Manufacturing PMI (Dec.)             57.1                      NA                56.5

Construction Spending (MoM, Nov.)        0.9%                   1.0%               1.6%

The key number from this group is the bump in the Markit PMI. December’s uptick in the figure came in at a six-year high, suggesting that the COVID-19 manufacturing recovery is holding strong. 

On the U.S. Treasuries front, the weekly 3 and 6-month T-bill auctions showed lagging interest. Both the 3 and 6-Month yields fell from previous levels, closing at 0.090% and 0.09% respectively. While not a premier forex indicator, the downturn in yields does suggest that institutional participation is limited. This will be an interesting trend to watch if stocks continue to experience heavy selling pressure.

If you’re trading the GBP/USD, remember that Boris Johnson is scheduled to speak at 3 PM EST today. Although his comments are likely to be benign, at least some verbiage regarding last week’s Brexit deal should come to pass. Either way, sudden volatility regarding the pound sterling and greenback is possible as Johnson speaks.

The Greenback Posts A Decent Open To 2021

Compared to how 2020 closed, the greenback is enjoying some success to open 2021. One of the big movers has been the GBP/USD, which is off more than 100 pips from session highs.

Here are the levels to watch this week for the GBP/USD:

• Resistance(1): Psyche Level, 1.3700
• Support(1): Weekly SMA, 1.3272

Overview: At this hour, it looks like a daily double top formation is setting up in the vicinity of 1.3700. If this level holds, the greenback may be in a position to rally against the pound sterling for the immediate future. Of course, this week’s American political news cycle will play big into how the USD reacts vs the majors.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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